E-mini S&P 500 Index (ES) Futures Technical Analysis – January 19, 2016 Forecast

March E-mini S&P 500 Index futures are trading higher shortly before the cash market opening. The index began to surge to the upside after sellers failed to react to the release of China’s fourth quarter GDP report that came in weaker-than-expected. This move encouraged short sellers to book profits after last week’s steep sell-off, triggering a strong short-covering rally.

The main trend is down according to the daily swing chart, however, momentum has shifted to the upside. A trade through 1946.50 will turn the main trend to up. A trade through 1849.25 will signal a resumption of the downtrend.

The new short-term range is 1946.50 to 1849.25. Its 50% level or pivot is 1898.00. This pivot will likely control the direction of the market the rest of the session.

Based on the current price at 1906.75, the next upside target is a downtrending angle at 1914.50. The next potential target angle drops in at 1930.50. This is the last potential resistance angle before the 1946.50 main top.

Taking out 1946.50 will not only signal a change in trend to up, but it could also fuel a short-covering rally into a major 50% level at 1962.25.

The inability to hold above the short-term pivot at 1898.00 will signal the presence of sellers. The daily chart is open to the downside with the next target a downtrending angle at 1882.50. This angle was essentially the trigger point for the earlier upside breakout.

Another potential downside target today is a long-term downtrending angle at 1867.00. This is followed by last week’s low at 1849.25.

Taking out 1849.25 will signal a resumption of the downtrend. This could fuel an acceleration to the downside with the August 24, 2015 bottom at 1824.25 the primary downside target.

Watch the price action and read the order flow at 1898.00 the rest of the session. Trader reaction to this level will tell us whether the bulls are coming in to support the market, or if the sellers are regaining control.