E-mini S&P 500 Index (ES) Futures Technical Analysis – Trying to Build Support Base at 4328.25 to 4278.50

December E-mini S&P 500 Index futures are edging higher late in the session on Wednesday, recovering earlier losses as investors grew more optimistic that congressional Democrats and Republicans could reach a deal to avert a government debt default.

At 19:16 GMT, December E-mini S&P 500 Index futures are trading 4341.50, up 7.50 or +0.17%. The low of the session is 4273.75.

Stocks fell early after a strong showing of private jobs in September fueled bets the Federal Reserve could start reining in monetary stimulus soon. The ADP National Employment Report showed private payrolls increased by 568,000 jobs last month. Economists polled by Reuters had forecast a rise of 428,000 jobs.

The benchmark index turned higher after top U.S. Senate Republican Mitch McConnell said his party would support an extension of the federal debt ceiling into December, a move that would head off a historic default with a heavy economic toll.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, three days of consolidation following last Friday’s closing price reversal bottom, indicate that momentum could be getting ready to shift to the upside.

A trade through 4365.75 will confirm the closing price reversal bottom and shift momentum to the upside. This could trigger the start of a 2 to 3 day countertrend rally. The main trend will change to up on a move through 4472.00.

A move through 4260.00 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 4117.00 to 4539.50. The index has been straddling its retracement zone at 4328.25 to 4278.50 the last five sessions. This suggests investors are trying to build a support base.

The minor range is 4472.00 to 4260.00. Its 50% level or pivot at 4366.00 is potential resistance and a trigger point for a breakout to the upside.

The short-term range is 4539.50 to 4260.00. Its retracement zone at 4399.75 to 4432.75 is the primary upside target. This is the last potential resistance area before the 4472.00 main top.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index into the close on Wednesday is likely to be determined by trader reaction to 4328.25.

Bullish Scenario

A sustained move over 4328.25 will indicate the presence of buyers. This could trigger a surge into 4366.00. Taking out this level could fuel a strong rally into the short-term 50% level at 4399.75.

Bearish Scenario

A sustained move under 4328.25 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 4278.50, followed by 4260.00.