E-mini S&P 500 Index (ES) Futures Technical Analysis – Failure at 2651.50 Could Lead to Steep Sell-off

December E-mini S&P 500 Index futures rallied to a new all-time high early Monday as investors celebrated the Senate’s passing of a major tax reform bill over the week-end. The index soared to 2665.25 before pulling back.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed during the pre-market session when buyers took out 2658.50.

Given the higher-high chart pattern, the only level investors have to worry about the rest of the session is Friday’s close at 2644.00. A move below this level will indicate the selling is greater than the buying at current price levels. A close below this level will form a potentially bearish closing price reversal top. This could lead to a 2 to 3 day correction of at least 50% of the current upswing.

The short-term range is 2605.00 to 2665.25. Its retracement zone at 2635.00 to 2628.00 is the initial downside target.

The main range is 2555.50 to 2665.25. Its retracement zone at 2610.25 to 2597.50 is the primary downside target.

Daily Technical Forecast

Based on the current price at 2655.75, the direction of the index the rest of the session is likely to be determined by trader reaction to the steep uptrending angle at 2651.50.

Holding above 2651.50 will indicate the presence of buyers. If this generates enough upside momentum then we could see a retest of 2665.25.

A sustained move under 2651.50 will signal the presence of sellers. This could trigger the start of a steep drop since the next target zone doesn’t come in until 2635.00 to 2628.00.