E-mini S&P 500 Index (ES) Futures Technical Analysis – Next Downside Target 4202.25 – 4159.25 RT Zone

September E-mini S&P 500 Index futures are trading sharply lower late Monday as investors liquidated economically sensitive shares and travel stocks and sought the perceived safety of U.S. Treasury bonds on fears that a surge in COVID-19 cases would derail a broader economic recovery.

All 11 S&P sectors fell, with the so-called value stocks, including financial, industrial, materials and energy dropping between 2.5% and 4.4%.

The banking sub-index sank 3.4%, tracking a fall in the benchmark 10-year Treasury yield to mid-February lows.

At 18:26 GMT, September E-mini S&P 500 Index futures are at 4234.00, down 85.00 or -1.96%.

Shares of travel-related companies, which had just begun to climb after suffering steep losses during pandemic-driven lockdowns last year, fell again on Monday. The S&P 500 Airlines sub-index slumped nearly 4%.

Cruiseliners Royal Caribbean Group, Carnival Corp and Norwegian Cruise Line dropped between 4.6% and 5.9%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 4126.75 will change the main trend to down. A move through 4384.50 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. The trend turned down when sellers took out a pair of minor bottoms at 4279.25 and 4269.25.

The minor range is 4384.50 to 4224.00. Its 50% level at 4304.25 is potential resistance. This level will move down as the index moves lower.

The short-term range is 4126.75 to 4384.50. The index is currently trading on the weak side of its 50% level at 4255.75, making it potential resistance.

The main range is 4020.00 to 4384.50. Its retracement zone at 4202.25 to 4159.25 is the primary downside target and potential value area. Look for buyers on a break into this zone.

Daily Swing Chart Technical Forecast

The direction of the September E-mini S&P 500 Index into the close on Monday will be determined by trader reaction to the 50% level at 4255.75.

Bearish Scenario

A sustained move under 4255.50 will indicate the presence of sellers. If this move continues to generate enough downside momentum then look for the selling to possibly extend into the main 50% level at 4202.25. Look for buyers on the first test of this level.

If 4202.25 fails as support then look for the selling to possible extend into the Fibonacci level at 4159.25. Look for buyers on the first test of this level. They will be trying to defend the main bottom at 4126.75.

Not only will the trend change to down on a move through 4126.75, but we could also see an acceleration to the downside with 4020.00 the next likely target.

Bullish Scenario

A sustained move over 4255.75 will signal the presence of buyers. This could trigger a late session retracement into the pivot at 4304.25.