E-mini S&P 500 Index (ES) Futures Technical Analysis – Close Under 3931.00 Forms Key Reversal Top

March E-mini S&P 500 Index futures are trading slightly lower shortly after the cash market close. The index hit an all-time high early Tuesday as cyclical sectors gained on the prospect of more fiscal aid to lift the U.S. economy from a coronavirus-driven slump, but late in the session, a wave of profit-taking erased those advances.

At 21:04 GMT, March E-mini S&P 500 Index futures are at 3926.00, down 5.00 or -0.13%.

Traders took profits, causing the benchmark index to back off from session highs as yields rose on Tuesday. The weakness into the close reflected investor worries about the day’s surge in bond yields.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out Friday’s high early in the session.

A trade through 3656.50 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time (the index is up 10 sessions since the last main bottom), the index is ripe for a closing price reversal top. This chart pattern won’t change the trend to up, but if confirmed, it could trigger the start of a 2 to 3 day correction.

The minor trend is also up. A trade through 3878.25 will change the minor trend to down. This will shift momentum to the downside.

The minor range is 3878.25 to 3959.25. Its 50% level at 3918.75 is the first downside target.

The second minor range is 3656.50 to 3959.25. If the minor trend changes to down then look for the selling to possibly extend into the next 50% level at 3807.75.

Short-Term Outlook

The key level to watch into the close on Tuesday is Friday’s close at 3931.00. Trader reaction to this price could determine the direction of the index tomorrow.

Bullish Scenario

A sustained move over 3931.00 will indicate the presence of buyers. This could trigger a retest of 3959.25. Taking out this level could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 3931.00 will signal the presence of sellers. This could lead to a test of the first pivot at 3918.75. Taking out this level could trigger a further break into the minor bottom at 3878.25.

Side Notes

A close under 3931.00 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction with 3807.75 the next major downside target.