E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Close Over 3729.50 to Avoid Reversal Top

March E-mini S&P 500 Index futures soared to a record high early Monday then coasted the rest of the session as trading volume faded throughout the session. The catalyst driving the price action was President Trump’s signing of a $2.3 trillion pandemic aid and government spending bill.

Since the trade was expected to be light due to another holiday shortened week, the size of the rally may have caught investors off-guard. The news was also a surprise since Trump had threatened to block the hard-fought bill.

On Monday, March E-mini S&P 500 Index futures settled at 3729.50, up 34.50 or +0.93%.

In other news, stocks battered by coronavirus lockdowns, such as airlines and cruise lines, advanced. The S&P 1500 airlines index gained 0.9% as carriers are set to receive $15 billion in additional payroll assistance under the new government aid.

Cruise operators Royal Caribbean Cruises Ltd, Carnival Corp and Norwegian Cruise Line Holdings Ltd each rose by at least 3%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early in the session when buyers took out the previous main top at 3724.00. A trade through 3732.25 on Tuesday will signal a resumption of the uptrend. The main trend will change to down on a move through 3596.00.

The new minor range is 3596.00 to 3732.25. Its 50% level at 3664.00 is support.

The second minor range is 3497.25 to 3732.25. Its 50% level at 3614.75 is additional support.

Both 50% levels will move up as the index moves higher.

Daily Swing Chart Technical Forecast

With the benchmark index at an all-time high, there is no resistance so the key level to watch becomes the previous day’s close. Trader reaction to 3729.50 will determine the direction of the March E-mini S&P 500 Index on Tuesday.

Bullish Scenario

A sustained move over 3729.50 will indicate the presence of buyers. Taking out 3732.25 will indicate the buying is getting stronger, however, due to the low volume, we don’t expect to see an acceleration to the upside.

Bearish Scenario

A sustained move under 3729.50 will signal the presence of sellers. If this move creates enough downside momentum then look for a possible break into the pivot at 3664.00. A failure to hold this level could trigger an acceleration into 3614.75.

Even though the volume is expected to be light, we expect the market will fall faster than it will rally.

Side Notes

A higher-high, lower-close will form a closing price reversal top on the daily chart. If confirmed, this potentially bearish chart pattern could trigger the start of a 2 to 3 day correction.

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