E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 2876.75 to 2753.75 Sets the Tone

March E-mini S&P 500 Index futures fell for the seventh straight session on Friday and the benchmark cash index suffered its biggest weekly drop since the 2008 global financial crisis on growing fears the fast-spreading coronavirus could lead to a recession, although stocks cut losses at the end of the day’s session after Federal Reserve Chairman Jerome Powell suggested the central bank would cut interest rates if needed.

On Friday, March E-mini S&P 500 Index futures settled at 2951.00, down 6.00 or -0.20%.

The cash market S&P 500 Index lost 11.5% week to date in its worst weekly performance since the financial crisis over 10-years ago. The U.S. stock market benchmark is down 13% from its all-time high reached just last week.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down last week after a series of main bottoms were taken out by the aggressive selling pressure.

A trade through 3397.50 will change the main trend to up. This is highly unlikely, but due to the prolonged move down in terms of price and time, traders should start watching for bottoming action, especially a closing price reversal bottom.

The main range is formed by the December 24, 2018 main bottom at 2356.00 and the February 20, 2020 main top at 3397.50. Its retracement zone at 2876.75 to 2753.75 is the first major downside target. This area was tested briefly on Friday when the market traded down to 2853.25 and recovered into the close.

Short-Term Outlook

Our work indicates that the near-term direction of the March E-mini S&P 500 Index is likely to be determined by trader reaction to the major retracement zone at 2876.75 to 2753.75.

Holding above 2876.75 will indicate the return of buyers. This could lead to a test of the uptrending Gann angle at 2949.50. Overcoming this angle will indicate the buying is getting stronger with potential upside targets coming in at 3013.50 and 3205.50.

If 2876.75 fails to hold then look for the selling to possibly extend into the major Fibonacci level at 2753.75. If this level fails then look for the selling to extend into the uptrending Gann angle at 2652.25.

Look for a technical bounce on the first test of 2652.25. If it fails then look for the selling to possibly extend into the next uptrending Gann angle at 2504.25. This is the last potential support angle before the 2356.00 main bottom.