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E-mini S&P 500 Index (ES) Futures Technical Analysis – Close Under 3748.75 Forms Bearish Reversal Top

By:
James Hyerczyk
Published: Jan 4, 2021, 19:35 UTC

Trader reaction to 3684.75 will determine the direction of the March E-mini S&P 500 Index into the close.

E-mini S&P 500 Index

In this article:

March E-mini S&P 500 Index futures plunged from record levels on the first trading day of the year on Monday as nerves over the outcome of runoff elections in Georgia this week countered optimism over a vaccine-driven recovery in the global economy.

At 19:07 GMT, March E-mini S&P 500 Index futures are trading 3685.00, down 63.75 or -1.70%.

The fate of President-elect Joe Biden’s agenda including rewriting the tax code, boosting stimulus and infrastructure spending hinges firmly on Tuesday’s twin Senate races in the battleground state of Georgia that will determine control of the chamber.

Energy and materials were the only two sectors trading higher. Real estate, utilities and industrials posted the sharpest percentage declines.

S&P member Tesla Inc shares extended a meteoric rally to scale to a record high after the electric-car maker reported better-than-expected vehicle deliveries in 2020.

Daily March E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum appears to be ready to shift to the downside. A trade through the intraday high at 3773.25 will signal a resumption of the uptrend. The main trend will change to down on a move through 3596.00.

The minor range is 3596.00 to 3773.25. The index is currently straddling its 50% level at 3684.75. Trader reaction to this level late in the session could determine the direction of the market into the close.

The second minor range is 3497.25 to 3773.25. Its 50% level at 3635.25 is potential support and also a potential trigger point for an acceleration to the downside.

The short-term range is 3216.25 to 3773.25. If the main trend changes to down then its retracement zone at 3494.75 to 3429.00 will become the primary downside target.

Short-Term Outlook

Trader reaction to 3684.75 will determine the direction of the March E-mini S&P 500 Index into the close.

Bullish Scenario

A sustained move over 3684.75 will indicate the return of buyers. The first target is last week’s close at 3748.75. This is followed by the intraday high at 3773.25.

Bearish Scenario

A sustained move under 3684.75 will signal the presence of sellers. If this creates enough late session momentum then look for the selling to extend into 3635.25. This is followed by the main bottom at 3596.00. Taking out this level will change the main trend to down.

Side Notes

A close under 3748.75 will form a potentially bearish closing price reversal top. If confirmed on Tuesday, this could trigger the start of a 2 to 3 day correction.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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