E-mini S&P 500 Index (ES) Futures Technical Analysis – In Position to Challenge All-Time High; Still Vulnerable to Reversal Top

December E-mini S&P 500 Index futures are trading higher early Tuesday, following through to the upside after posting a solid performance the previous session. Traders said optimism around U.S.-China trade talks as well as the corporate earnings season were primarily behind the strong upside momentum.

The S&P 500 cash market notched its first close above 3,000 since September 18. The benchmark index could reach this week an all-time high set in July. As of Monday’s close at 3006.72, the broad index is just 0.7% from hitting 3027.98, the record from July 26.

At 04:40 GMT, December E-mini S&P 500 Index futures are trading 3012.25, up 5.75 or +0.19%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the October 17 main top at 3008.00 and the September 24 minor top at 3012.25.

The main trend will change to down on a move through the last swing bottom at 2881.75. This is highly unlikely. However, the index is up eight session from this bottom, which puts it inside the window of time to form a potentially bearish closing price reversal top. This pattern is likely to indicate profit-taking at current price levels, rather than a change in trend.

The minor trend is also up. A trade through 2975.00 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is 2881.75 to 3014.25. Its 50% level at 2948.00 is potential support. As the market moves higher, this 50% level will also move higher.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 3012.25, the direction of the December E-mini S&P 500 Index futures contract on Tuesday is likely to be determined by trader reaction to Monday’s close at 3006.50.

Bullish Scenario

A sustained move over 3006.50 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for buyers to take a run at the two major tops at 3025.75 and 3032.25.

Bearish Scenario

A sustained move under 3006.50 will signal the presence of sellers. This will put the index in a position to form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction with the first target the minor bottom at 2975.00.

Taking out 2975.00 will shift momentum to the downside. This could help extend the selling into the 50% level at 2948.00.