It is only the 3rd full day of trading for new Micro equity index futures and what perfect timing as volatility has returned to the markets!
The S&P 500 index has seen two straight days of losses – closing 41.75 points down on Monday (a whopping 1.4 percent) and another 13.5 points yesterday. Amidst the volatility, the S&P is now at an important inflection level relative to historical price activity.
One of the classic tenets of technical analysis is that a broken support level becomes a future area of resistance & a broken resistance level becomes a future area of support. In this case, the S&P is testing a previous resistance level which has since been broken. The question is, will support hold?
Tracking Historical Support in the MES
Since the MES (Micro E-mini S&P 500) has only been trading for 3 days, we will have to initially reference a full-sized E-mini S&P 500 chart (ES) to track this support level.
As seen in the NinjaTrader chart above, a previous resistance level was observed at 2866 where the blue horizontal line is drawn. The yellow circle indicates where this level previously acted as resistance. Because this level has since been broken, we can now consider it a possible support level.
Additionally, since ES and MES are for all intents and purposes the same chart, we can now transfer this known support level to our MES chart.
Plotting the same blue horizontal support line on an MES chart on a 5-minute interval, we observe that price actually broke down through the 2866 level yesterday for a brief period, but quickly recovered.
Regardless of what happens, both bulls and bears will be watching this level closely during today’s trading session.