E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Hold 3695.00 to Sustain Upside Momentum

March E-mini S&P 500 Index futures are trading sharply higher during the pre-market session on Monday as relief over long-waited U.S. economic stimulus and a post-Brexit trade deal lifted investor sentiment in thin holiday trading.

U.S. President Donald Trump on Sunday signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a federal government shutdown in a crisis of his own making.

At 11:21 GMT, March S&P 500 Index futures are trading 3721.75, up 26.75 or +0.72%.

Wall Street is coming off a quiet holiday week where the major averages posted flat returns. In the cash market, the S&P 500 Index fell 0.2% last week as some investors took the chips off into the year-end. The benchmark index has gained 14.6% year to date.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend changed to up on a trade through 3724.00. The move erased the short-term change in trend that occurred last Monday when sell stops were hit under 3620.75. That move was fueled by a knee-jerk reaction to reports of a coronavirus variant in Britain. A trade through 3596.00 will change the main trend to down.

The new minor range is 3596.00 to 3726.50. Its rolling 50% level at 3661.25 is support. This level will rise with each new high.

Daily Swing Chart Technical Forecast

The direction of the March S&P 500 Index on Monday will be determined by trader reaction to the previous close at 3695.00. In other words, since the rally is being driven by strong momentum, the only pattern that will signal an end to the move will be a closing price reversal top.

Bullish Scenario

A sustained move over 3695.00 will indicate the presence of buyers. Taking out the intraday high at 3726.50 will indicate the buying is getting stronger. There is no resistance at this time so don’t try to pick a top. You’ll only be feeding the bull.

Bearish Scenario

A sustained move under 3695.00 will signal the presence of sellers. This could trigger an intraday break into the minor pivot at 3661.25. If this level fails as support then look for the selling to possibly extend into the main bottom at 3596.00.

Side Notes

A close under 3695.00 and a follow-through move on Tuesday will confirm a closing price reversal top. This could trigger a 2 to 3 day correction or even a change in trend if the selling volume is strong enough.

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