E-mini S&P 500 Index (ES) Futures Technical Analysis – Trading Inside Trump Election Rally Retracement Zone at 2368.50 to 2231.00

Based on the early price action, the direction of the March E-mini S&P 500 Index is likely to be determined by trader reaction to the major 50% level at 2368.50.
James Hyerczyk
E-mini S&P 500 Index
E-mini S&P 500 Index

March E-mini S&P 500 Index futures are trading lower shortly after the pre-market opening on Tuesday night. The weakness was a continuation of the steep drop from Monday’s session. The catalysts behind the selling pressure are said to be the U.S. government shutdown, President Trump’s criticism of the U.S. Federal Reserve and Treasury Secretary Mnuchin’s call to six major banks which raised concerns over liquidity.

At 2324 GMT, March E-mini S&P 500 Index futures are trading 2337.75, down 4.00 or -0.18%.

Daily March E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Today’s early weakness reaffirmed the downtrend.

The market is in no position to change the main trend to up, but due to the prolonged move down in terms of price and time, it is in the window of time for a potentially bullish closing price reversal bottom.

Daily Retracement Zone Technical Analysis

The market is currently trading inside the retracement zone created by the November 2016 bottom to the September 2018 top. This zone is 2368.50 to 2231.00. This is a major retracement zone. It represents 50% to 61.8% of the entire Trump Rally.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the March E-mini S&P 500 Index is likely to be determined by trader reaction to the major 50% level at 2368.50.

Bullish Scenario

Overtaking and sustaining a rally over 2368.50 will indicate the presence of buyers. If this generates enough upside momentum then watch for a short-covering rally back to possibly 2503.75.

Bearish Scenario

A sustained move under 2368.50 will signal the presence of sellers. This could trigger a further decline into a series of main bottoms at 2275.75, 2262.00 and 2241.50.

If 2241.50 fails as support then look for the selling to extend into the Fibonacci level at 2231.00. If this fails then look for a further break into the December 5, 2016 main bottom at 2187.25. This is the trigger point for an acceleration to the downside with the November 9, 2016 main bottom at 2036.75 the next major target.

If the index trades 2036.75 then this will mean the entire Trump Rally has been erased.

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