E-mini S&P 500 Index (ES) Futures Technical Analysis – Next Major Decision Area is 4416.75 – 4445.75
December E-mini S&P 500 Index futures are trading higher late in the session on Wednesday as investors look to react to the latest policy announcements from the U.S. Federal Reserve.
The initial reaction suggests policymakers haven’t said anything unexpected yet with economic forecasts and a press conference from Fed Chairman Jerome Powell still on the tap.
At 18:52 GMT, December E-mini S&P 500 Index futures are trading 4376.25, up 33.00 or +0.76%.
In economic news, the Federal Reserve kept its benchmark interest rates anchored near zero. Officials also indicated they expect to begin reducing monthly asset purchases “soon,” but did not say when. Additionally, economic projections pointed to slower growth this year but higher inflation than previously projected.
The most important development in my opinion: More Federal Open Market Committee (FOMC) members now see the first rate hike happening in 2022. In June, when members last released their economic projections, a slight majority put that increase into 2023.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 4293.75 will signal a resumption of the downtrend. The main trend will change to up on a move through 4539.50.
The minor trend is also down. A trade through 4478.50 will change the minor trend to up. This will also shift the momentum to up.
The main range is 4117.00 to 4539.50. Its retracement zone at 4328.25 to 4278.50 is the major support. This zone stopped the selling at 4293.75 on Monday.
The short-term range is 4214.50 to 4539.50. The index is currently trading on the strong side of its retracement zone at 4377.00 to 4338.75, making it additional support.
The minor range is 4539.50 to 4293.75. Its retracement zone at 4416.75 to 4445.75 is the primary upside target.
The index is clearly trying to form a support base at 4328.25 to 4278.40. There is nothing wrong with that but it’s only half the battle.
It’s alright to try to form a support base, but if a market doesn’t follow-through with a higher-top then it will move sideways. This occurs when investors think a market is over-priced on rallies, but under-valued on dips. The market goes nowhere and prices churn.
We should find out how strong the index is on the next test of 4416.75 to 4445.75.
Since the main trend is down, sellers are likely to come in on a test of this area. They are going to try to form a new secondary lower top. If buyers can overcome 4445.75, however, then enough momentum could be generated to challenge the all-time high at 4539.50.
On the weakside, The daily chart indicates there is plenty of room to the downside under 4278.40 so be prepared for a possible acceleration into 4214.50 or 4117.00 if this level is taken out with heavy selling pressure.