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E-mini S&P 500 Index (ES) Futures Technical Analysis – Reaction to 4604.50 – 4576.50 Sets Near-Term Tone

By:
James Hyerczyk
Updated: Dec 15, 2021, 16:54 UTC

The direction of the December E-mini S&P 500 Index into the close on Wednesday will likely be determined by trader reaction to 4628.00.

E-mini S&P 500 Index

In this article:

March E-mini S&P 500 Index futures are edging lower on Wednesday ahead of a policy announcement by the Federal Reserve later in the day, as the latest readings on inflation solidified bets of a speedier wind-down of the central bank’s pandemic-era monetary stimulus.

The U.S. central bank is widely expected to signal a faster end to its bond-buying campaign and a quicker start to raising interest rates at its meeting. The statement will be released at 19:00 GMT, followed by Fed chief Jerome Powell’s news conference.

At 16:16 GMT, March E-mini S&P 500 Index futures are trading 4609.00, down 19.00 or -0.41%. S&P 500 Trust ETF (SPY) is at $461.83, down $1.53 or -0.33%.

S&P 500 Index investors have been pricing for the Fed to end its bond-buying around March 2022 and then proceed with one or maybe two rate hikes throughout the year. Anything more than two rate hikes penciled in for next year would be considered a hawkish surprise and bearish for stock prices.

The consensus going into the Federal Open Market Committee (FOMC) meeting has been extremely hawkish, which sets up a “sell the rumor, buy the fact” scenario for equity traders. Furthermore, the FOMC meeting comes as the rapid spread of the Omicron coronavirus variant is causing concern that the economic recovery will be derailed.

Despite the widely expected hawkish tone by the benchmark S&P 500 Index could reverse to the upside if Fed Chairman Powell, in his post-meeting press conference strongly emphasizes the uncertainty of the guidance due to the Omicron breakout.

Daily March E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 4723.25 will signal a resumption of the uptrend. A move through 4485.75 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through yesterday’s low at 4596.25 will indicate the selling pressure is getting stronger.

The short-term range is 4485.75 to 4723.25. The index is currently testing its retracement zone at 4604.50 to 4576.50. Trader reaction to this zone will determine the near-term direction of the index.

The main range is 4252.75 to 4735.00. Its retracement zone at 4493.75 to 4437.00 is controlling the longer-term direction of the index. This zone stopped the selling at 4485.75 on December 3.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index into the close on Wednesday will likely be determined by trader reaction to 4628.00.

Bearish Scenario

A sustained move under 4628.00 will indicate the presence of sellers. Crossing to the weak side of the short-term 50% level at 4604.50 will indicate the selling is getting stronger. This could trigger a further break into the Fibonacci level at 4576.50.

The Fib level at 4576.50 is a potential trigger point for an acceleration to the downside with the next target a support cluster at 4493.75 to 4485.75.

Bullish Scenario

A sustained move over 4628.00 will signal the presence of buyers. This could trigger an intraday rally into a minor pivot at 4659.75. Overtaking this level will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into 4723.25.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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