E-mini S&P 500 Index (ES) Futures Technical Analysis – In position to Form Closing Price Reversal Top

March E-mini S&P 500 Index futures are edging lower late in the session on Friday after giving back earlier gains. We could be looking at profit-taking ahead of the weekend or some money allocation due to risking U.S. Treasury yields.

The benchmark index opened at record highs as hopes for more economic stimulus to ride out a pandemic-led downturn eclipsed concerns over a significant loss of pace in labor market recovery.

At 18:24 GMT, March E-mini S&P 500 Index futures are trading 3786.00, down 9.50 or -0.25%. This is down from a high of 3817.75.

The U.S. economy shed jobs for the first time in eight months in December as the country buckled under an onslaught of COVID-19 infections, suggesting a significant loss of momentum that could temporarily stall the recovery from the pandemic.

Payrolls decreased by 140,000 jobs last month, the first decline since April, after increasing by 336,000 in November. The economy has recovered 12.4 million of the 22.2 million jobs lost during the pandemic. Economists polled by Reuters had forecast 77,000 jobs would be added in December.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum could be turning to the downside with the formation of a potentially bearish closing price reversal top chart pattern.

A trade through the intraday high at 3817.75 will signal a resumption of the uptrend. The main trend will change to down on a move through 3596.00.

The minor trend is also up. A trade through 3652.00 will change the minor trend to down. This will shift momentum to the downside.

The first minor range is 3652.50 to 3817.75. Its 50% level at 3735.00 is the first potential downside target.

The second minor range is 3596.00 to 3817.75. Its 50% level at 3706.75 is additional support.

Daily Swing Chart Technical Forecast

The direction of the March E-mini S&P 500 Index into the close on Friday is likely to be determined by trader reaction to 3795.50.

Bullish Scenario

A sustained move over 3795.50 will indicate the presence of buyers. If this move creates enough upside momentum, we could see a retest of the intraday high at 3817.75.

Bearish Scenario

A sustained move under 3795.50 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into 3735.00.

Side Notes

A close under 3795.50 will form a potentially bearish closing price reversal top. If confirmed next week, this could trigger the start of a 2 to 3 day correction with potential downside targets coming in at 3735.00, 3706.75 and 3657.50.

For a look at all of today’s economic events, check out our economic calendar.