E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 3714.50 Sets the Tone

March E-mini S&P 500 Index futures are inching lower on extremely low volume in the last trading session of a tumultuous year on Thursday, as investors digested big market gains and hoped that more stimulus and coronavirus vaccines will drive a strong economic recovery in 2021.

At 14:36 GMT, March E-mini S&P 500 Index futures are trading 3718.75, down 5.50 or -0.15%.

Earlier in the week, the benchmark index surged to a record high in a stunning recovery since March when the COVID-19 triggered the steepest global recession in generations and left millions of Americans unemployed.

But the rally stalled as near-term expectations of bigger stimulus checks dimmed after Senate Majority Leader Mitch McConnell blocked a quick vote to back President Donald Trump’s call to increase COVID-19 relief checks to $2,000 from $600.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside with the formation of a potentially bearish closing price reversal top on Tuesday.

A trade through 3714.50 will confirm the chart pattern. It won’t change the trend to down, but it could trigger the start of a 2 to 3 day correction. A move through 3747.75 will negate the chart pattern and signal a resumption of the uptrend. The main trend will change to down on a move through 3596.00.

The minor range is 3596.00 to 3747.75. Its 50% level at 3671.75 is the primary downside target.

The second minor range is 3497.25 to 3747.75. Its 50% level at 3622.50 is another potential downside target.

Daily Swing Chart Technical Forecast

Although we’re not expecting any major moves, I think it’s important to note the price action despite the low volume since this can carry over to Monday’s trade.

Bullish Scenario

A sustained move over 3747.75 will indicate the presence of buyers. There is no resistance over this level, but don’t expect an acceleration because of the light trade.

Bearish Scenario

Taking out 3714.50 will be the more interesting move because this will confirm the closing price reversal top chart pattern. This could trigger the start of a 2 to 3 day correction with potential downside targets coming in at 3671.75 and 3622.50. The latter is the last potential support before the 3596.00 main bottom.