E-mini S&P 500 Index (ES) Futures Technical Analysis – Sellers Could Be Targeting 4328.25 – 4278.50

December E-mini S&P 500 Index futures are trading sharply lower during the pre-market session on Monday. After last week’s sell-off in the benchmark index was mostly fueled by domestic issues, this week began with a steep drop in Hong Kong’s Hang Seng Index, pressuring U.S. futures.

In the U.S. last week, investors had to deal with corporate tax worries, the Delta COVID variant, and possible shifts in the U.S. Federal Reserve’s timeline for tapering asset purchases.

At 04:35 GMT, December E-mini S&P 500 Index futures are trading 4385.50, down 36.25 or -0.82%.

The index also closed under the 50-day moving average on Friday. The move is a sign of weakness and it is likely leading to early profit-taking by a number of money managers.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Today’s early weakness signaled a resumption of the downtrend. The next target is the main bottom at 4339.75.

A trade through 4539.50 will change the main trend to up. This is highly unlikely but due to the prolonged move down in terms of price and time, the market is currently inside the window of time for a potentially bullish closing price reversal bottom. This won’t change the trend, but it could lead to a 2 to 3 day counter-trend rally.

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

The short-term range is 4339.75 to 4539.50. The market is trading on the weak side of its retracement zone at 4416.00 to 4439.75, making it resistance.

The intermediate range is 4214.50 to 4539.50. Its retracement zone at 4377.00 to 4338.75 is the next downside target area.

The main range is 4117.00 to 4539.50. Its retracement zone at 4328.25 to 4278.50 is the best downside target and value zone.

Another key area to watch is the potential support cluster at 4338.75 to 4328.25.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index early Monday is likely to be determined by trader reaction to 4421.75.

Bearish Scenario

A sustained move under 4421.75 will indicate the presence of sellers. Taking out the Fib level at 4416.00 indicates the selling is getting stronger. The next downside target is the 50% level at 4377.00.

Watch for a technical bounce on the first test of 4377.00. If it fails, we could see a further break into the main bottom at 4339.75, followed by the support cluster at 4338.75 to 4328.25.

Buyers could step in on a move into the value zone at 4328.25 to 4278.50.

Bullish Scenario

A sustained move over 4421.75 will signal the presence of buyers. This will also put the index in a position to form a closing price reversal bottom. The first upside target is 4439.75, followed by the minor top at 4478.50.