E-mini S&P 500 Index (ES) Futures Technical Analysis – December 19, 2018 Forecast

Based on the price action the last two sessions, the direction of the March E-mini S&P 500 Index on Wednesday is likely to be determined by trader reaction to this week’s low at 2530.00. Taking out 2530.00 then recapturing yesterday’s close at 2538.00 will indicate the buying is greater than the selling at current price levels. This could trigger a strong intraday rally. A higher close will form a daily closing price reversal bottom. This could fuel the start of a 2 to 3 day counter-trend rally.
James Hyerczyk
E-mini S&P 500 Index
E-mini S&P 500 Index

March E-mini S&P 500 Index futures are called higher based on the pre-market trade. Investors may be buying on hopes that the U.S. Federal Reserve could decide to hit the brakes a little on future rate hikes in 2019 and 2020. The central bank will release its decision on interest rates at 1900 GMT.

The Fed is widely expected to hike its benchmark interest rate 25-basis points to 2.50%. Despite pressure from President Trump to pass on a rate hike, the Fed has no choice but to raise at this time, mostly because of healthy GDP numbers and a solid labor market. The Fed is likely to be dovish, which means there will be fewer than three rate hikes next year. The number the Fed decides on is likely to determine the strength of the market today.

At 1330 GMT, March E-mini S&P 500 Index futures are trading 2558.50, up 20.50 or +0.81%.

Daily March E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 2690.50 will change the main trend to up. A move through 2530.00 will signal a resumption of the downtrend with the next major target the August 25, 2017 main bottom at 2434.50.

Due to the prolonged move down in terms of price and time, traders should also prepare for a possible closing price reversal bottom. We expect to see a volatile two-sided trade after the Fed announcements and remarks by Fed Chair Jerome Powell.

The short-term range is 2690.50 to 2530.00. Its retracement zone at 2610.25 to 2629.25 is the first upside target.

The main range is 2819.00 to 2530.00. Its retracement zone at 2674.50 to 2708.50 is the next potential upside target.

Daily Swing Chart Technical Forecast

Based on the price action the last two sessions, the direction of the March E-mini S&P 500 Index on Wednesday is likely to be determined by trader reaction to this week’s low at 2530.00.

Bullish Scenario

A sustained move over 2530.00 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into 2610.25 to 2629.25. Look for sellers on the first test of this zone.

Taking out 2629.25 will indicate the buying is getting stronger with the next upside target the main 50% level at 2674.50, the main top at 2690.50 and the main Fibonacci level at 2708.50.

Bearish Scenario

A sustained move under 2530.00 will signal the presence of sellers. This could trigger an acceleration to the downside with the next major target coming in at 2434.50.

Closing Price Reversal Bottom Pattern

Taking out 2530.00 then recapturing yesterday’s close at 2538.00 will indicate the buying is greater than the selling at current price levels. This could trigger a strong intraday rally. A higher close will form a daily closing price reversal bottom. This could fuel the start of a 2 to 3 day counter-trend rally.

Look for heightened volatility and a wild, two-sided trade at 1900 GMT with the release of the Fed interest rate decision, the monetary policy statement, economic projections and remarks from Fed Chair Jerome Powell.

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