S&P 500 Futures Set Up for a Breakdown

The last time we talked about the S&P 500 (ES) futures market, it was bumping up against a short term down trend line.

We understood that this was a known level of U-turn and explained that it could send the market lower again.

Well, that’s exactly what happened…

The market U-turned lower after touching the down trend line, and momentum picked up to the downside after the Fed’s interest rate announcement last Wednesday.

Let’s take a look at where the market stands now and where we expect it to move going forward…

ES Breaks the Counter Trend Line

In the daily chart of the ES below, you can see how the market hit the known level of U-turn at the short term down trend line and broke the counter trend line bearish…

Daily Chart of S&P 500 (ES) Futures — Source: TradingView

We’re now expecting it to move lower towards the daily down Fibonacci extension at 3,199.00.

On the hourly chart, we are looking for the market to break a shorter term counter trend line bearish towards the one hour down Fibonacci at 3,662.75…

Hourly Chart of S&P 500 (ES) Futures — Source: TradingView

The ES one hour time frame is in a down trend. The market is making lower lows and lower highs.

There is a down Fibonacci with an extension price point 3,662.75, about -479 ticks below the market.

Entry: Counter trend line break bearish in the sell zone.

Stop: 3,916.25

Limit: 3,662.75

Once or if the one hour time frame provides the entry, and as long as the market stays in the sell zone, it will be a good idea to turn to the five minute time frame and look for Tunnel Trader short / Destination Trader short / Chandelier Trader short ideas towards the one hour price target.

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The Bottom Line

For more on the markets as well as trading education and trading ideas like this one, look for the next edition of Josh’s Daily Direction in your email inbox each and every trading day.

I’ll be bringing you more of my stock and futures contract trading tutorials as well as some additional trading ideas.

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Keep on trading,

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Josh Martinez

Josh Martinez

Josh Martinez is an elite Analyst who’s been actively trading the financial markets since 2011. He’s known as one the leading innovative traders in this industry due to his his cutting-edge strategies.

Josh first burst into the scene when he took an initial deposit investment of $500 and turned into over $39,000 in just under 2 years.
Josh’s trading articles have been featured in Your Trading Edge, The FX Street, Trader Planet, Forex Crunch, Trading Pub, and Equities.com.

In addition to trading, Joshua has also trained thousands of traders worldwide. His strategies and systems have helped others find success in the market

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