E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 3706.25 Sets the Tone

December E-mini S&P 500 Index futures are edging lower early Monday in the pre-market session after touching a record high shortly after the opening as Congress managed to seal a coronavirus stimulus deal before a shutdown deadline.

The price action suggests a “buy the rumor, sell the fact” situation since the fiscal stimulus deal has been priced into the market for a couple of weeks.

At 03:56 GMT, December E-mini S&P 500 Index futures are trading 3704.00, down 2.25 or -0.06%. This is down from a high of 3724.00.

Senate Majority Leader Mitch McConnell said lawmakers have reached an agreement on a $900 billion relief package, which would provide direct payments and jobless aid to struggling Americans. The announcement came after negotiators resolved a key sticking point by rolling back the Federal Reserve’s emergency lending powers.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out Friday’s high. The main trend will change to down on a trade through 3620.75.

The minor trend is also up. The new minor bottom is 3677.25. A trade through this level will change the minor trend to down and shift momentum to the downside.

The minor range is 3620.75 to 3724.00. Its 50% level at 3672.25 is the first potential support level.

The second minor range is 3497.25 to 3724.00. Its retracement zone at 3610.50 to 3583.75 is the second key support area.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index on Monday is likely to be determined by trader reaction to 3706.25.

Bullish Scenario

A sustained move over 3706.25 will indicate the presence of buyers. Taking out the intraday high at 3724.00 will indicate the buying is getting stronger. This could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 3706.25 will signal the presence of sellers. This could create the downside momentum needed to challenge 3672.25. Look for a technical bounce on the first test of this level, but be prepared for an acceleration into 3620.75 and 3610.50 if this level fails as support.