E-mini S&P 500 Index (ES) Futures Technical Analysis – Taking out 3768.00 Shifted Momentum to Downside

March E-mini S&P 500 Index futures are trading lower shortly after the cash market opening on Friday as incoming President Joe Biden’s $1.9 trillion stimulus plan sparked fears of an increase in taxes, while investors parsed quarterly reports from major U.S. lenders.

Shares of JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, which had seen a strong rally in the run-up to earnings, were all down even as the banks posted better-than-expected fourth-quarter profits.

At 14:48 GMT, March E-mini S&P 500 Index futures are trading 3779.00, down 12.25 or -0.32%.

In economic news, some investors worried that the government will need to fund the spending through tax hikes. Meanwhile, data showed a further decline in U.S. retail sales in December – the latest sign the economy lost considerable speed at the end of 2020.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 3824.50 will signal a resumption of the uptrend. The main trend will change to down on a move through 3596.00.

The minor trend is down. The minor trend changed to down on a trade through 3768.00. This move shifted momentum to the downside. Additionally, a new minor top has formed at 3817.75.

The new minor range is 3824.50 to 3768.00. Its 50% level at 3791.50 is potential resistance. This level will move down as the index moves lower.

On the downside, the nearest potential support is a pair of 50% levels at 3735.00 and 3706.75.

Daily Swing Chart Technical Forecast

The direction of the March E-mini S&P 500 Index into the close on Friday is likely to be determined by trader reaction to 3791.50.

Bearish Scenario

A sustained move under 3791.50 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into 3735.00. If this level fails then look for a drop into 3706.75.

The daily chart opens up to the downside under 3706.75 with the next target a support cluster at 3657.50 to 3652.50.

Bullish Scenario

Overcoming and sustaining a rally over 3791.50 will signal the return of buyers. If this generates enough upside momentum then look for the rally to possibly extend into the minor top at 3817.75, followed by the main top at 3824.50.