E-mini S&P 500 Index (ES) Futures Technical Analysis – Downside Momentum Puts 4500.25 – 4443.50 on Radar

December E-mini S&P 500 Index futures are down sharply on Friday, with travel, bank and commodity-stocks bearing the brunt of the sell-off, as the discovery of a new and possibly vaccine-resistant coronavirus variant spooked investors ahead of a short-trading session.

Stocks of major airline operators dropped between 5% and 6% in premarket trading, as the new variant detected in South Africa prompted the European Union, Britain and India among others to announce stricter border controls.

At 12:17 GMT, December E-mini S&P 500 Index futures are trading 4625.00, down 80.50 or -1.71%.

In stock related news, cruise operators Carnival Corp and Royal Caribbean Cruises plunged about 9% each.

Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Goldman Sachs, Wells Fargo & Co and Morgan Stanley fell between 3% and 4% as traders pared back their recent bets on interest rate hikes.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down when sellers took out the last swing bottom at 4649.00. It was reaffirmed when sellers took out 4625.25. A move through 4717.00 will change the main trend to up.

On the upside, the nearest potential resistance is a 50% level at 4742.25.

The minor range is 4740.50 to 4597.00. Its retracement zone at 4668.75 – 4685.75 is the next target. Since the main trend is down, look for sellers on the first test of this area. They will be trying to form a new secondary lower top.

The daily chart shows there is plenty of room to the downside with potential targets coming in at 452875, followed by a retracement zone at 4500.25 to 4443.50. Buyers could step in on a test of this zone since it represents value.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index into the close on Friday is likely to be determined by trader reaction to 4642.25.

Bearish Scenario

A sustained move under 4642.25 will indicate the presence of sellers. The first downside target is the intraday low at 4597.00. Taking out this level could create the downside momentum needed to trigger another sharp break into 4528.75, followed by 4500.25 to 4443.25. Look for counter-trend buyers to step in on a test of this area.

Bullish Scenario

A sustained move over 4642.25 will signal the presence of buyers. This could trigger a surge into the minor retracement zone at 4668.75 to 4685.75. Since the main trend is down, look for sellers on the first test of this area. They are going to try to form a potentially bearish secondary lower top.

Overtaking 4685.75 will indicate the buying is getting stronger. This could trigger a potential breakout over the main top at 4717.00.