E-mini S&P 500 Index (ES) Futures Technical Analysis – December 1, 2016 Forecast

December E-mini S&P 500 Index futures reached a new contract high on Wednesday, but a wave of sellers came in on the move as the buying dried up, triggering a sharp break into the close, and leading to the formation of a potentially bearish closing price reversal top.

The closing price reversal top was confirmed early Thursday on a move through yesterday’s low at 2197.25. This could trigger the start of a 2 to 3 correction and/or a minimum 50% retracement of either the short-term range or the long-term range.

The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation of the closing price reversal top. A trade through 2213.75 will negate the reversal top and could trigger an acceleration to the upside.

The minor trend turned down earlier in the session when the minor bottom at 2196.25 was taken out. This is a sign of weakness.

The short-term range is 2147.75 to 2213.75. Its retracement zone at 2180.75 to 2173.00 is the first major downside target. Since the main trend is up, we could see a technical bounce on the first test of this zone.

The main range is 2028.50 to 2213.75. If there is a major sell-off then its retracement zone at 2121.00 to 2099.25 will become the primary downside target.

Based on the current price at 2197.00, the direction of the index today will likely be determined by trader reaction to yesterday’s low at 2197.25.

A sustained move under 2197.25 will indicate the presence of sellers. This could create enough downside momentum to challenge the short-term 50% level at 2180.75. This is followed by the short-term Fib level at 2173.00.

The Fib level at 2173.00 is the trigger point for an acceleration into the major uptrending angle at 2148.50.

Regaining and sustaining a move over 2197.25 will indicate the presence of buyers and the lack of selling pressure. This could lead to a short-covering rally. If the rally falls short of taking out 2213.75, then watch for renewed selling pressure. This will send a signal that the selling is greater than the buying at current price levels.

Look for a downside bias on a sustained move under 2197.25.