E-mini S&P 500 Index (ES) Futures Technical Analysis – Rally Looking to Challenge 4416.75 – 4445.75

December E-mini S&P 500 Index futures are trading higher shortly before the cash market opening on Tuesday as value-seekers began to step in late Monday following a session that featured mostly aggressive selling from the opening.

The benchmark index was helped by stable Asian market, which help calm investor fears that the liquidity crisis at Chinese developer Evergrande would lead to global contagion.

Meanwhile, other investors are focused on the Federal Reserve which begins its two-day policy meeting on Tuesday. On Wednesday at 18:00 GMT, policymakers will release their official statement along with quarterly economic reports. Fed Chairman Jerome Powell will also hold a press conference after the announcements. Investors will be looking for more information from Powell about the central bank’s plans to taper its bond buying, specifically when that will happen.

At 10:58 GMT, December E-mini S&P 500 Index futures are trading 4384.75, up 41.75 or +0.96%.

Ahead of the cash market opening at 13:30 GMT, stocks linked to global growth are bouncing higher. Nucor Steel was up 1.8% in premarket trading. Copper miner Freeport-McMoRan added 3%. Chipmakers, banks and energy stocks were also rebounding.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Monday when sellers took out a swing bottom at 4339.75. A move through 4539.50 will change the main trend to up. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement of the last sell-off.

The minor trend is also down. A trade through 4478.50 will change the minor trend to up. This will shift momentum to the upside.

The main range is 4117.00 to 4539.50. On Monday, the selling stopped at 4293.75, inside its retracement zone at 4328.25 to 4278.50.

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 support.

The new minor range is 4539.50 to 4293.75. Its retracement zone at 4416.75 to 4445.75 is the new upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index on Tuesday is likely to be determined by trader reaction to the 50% level at 4377.00.

Bullish Scenario

A sustained move over 4377.00 will indicate the presence of buyers. If this move continues to generate enough upside momentum then look for the rally to possibly extend into the retracement zone at 4416.75 to 4445.75. Look for sellers on the first test of this zone.

Bearish Scenario

A sustained move under 4377.00 will signal the presence of sellers. If this move is able to create enough downside momentum then look for the selling to possibly extend into the Fibonacci level at 4338.75, followed closely by the main 50% level at 4328.25.

Another failure at 4328.25 will indicate the selling pressure is getting stronger. This could trigger an acceleration into yesterday’s low at 4293.75, followed by the main Fibonacci level at 4278.50. This is another potential trigger point for an acceleration to the downside.