E-mini S&P 500 Index (ES) Futures Technical Analysis – Volatility Building as Index Coils Inside Triangle

March E-mini S&P 500 Index futures are trading higher at the mid-session on Wednesday, but inside yesterday’s range, suggesting investor indecision and impending volatility.

Some headlines are saying the markets are being boosted by Democratic presidential candidate Joe Biden’s Super Tuesday victory, but that seems a little farfetched to me because I don’t think investors are looking out to November at this time, given the near-term volatility.

Others are saying solid U.S. economic reports are underpinning the markets, but that’s stale data from surveys taken before the coronavirus threat put the U.S. economy risk to recession.

In my opinion, the market is likely being underpinned by renewed optimism the U.S. economy is strong enough to withstand an economic hit, now that the Fed has shown it is willing to be more proactive.

At 18:01 GMT, March E-mini S&P 500 Index futures are trading 3076.00, up 79.00 or +2.64%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 2853.25 will signal a resumption of the downtrend. The main trend will change to up on a move through 3397.50.

The major support is a 50% to 61.8% retracement zone at 2876.75 to 2753.75. This area stopped the selling on Friday at 2853.25.

The short-term range is 3397.50 to 2853.25. Its retracement zone at 3125.50 to 3189.75 is the primary upside target. This zone stopped the buying at 3137.00 on Tuesday.

The minor range is 2853.25 to 3137.00. Its retracement zone support comes in at 2995.00 to 2961.50.

Daily Technical Forecast

Based on the early price action and the current price at 3076.00, the direction of the March E-mini S&P 500 Index the rest of the session on Wednesday is likely to be determined by trader reaction to the steep uptrending Gann angle at 3042.25.

Bullish Scenario

A sustained move over 3042.25 will indicate the presence of buyers. The first upside targets are a downtrending Gann angle at 3109.50, a 50% level at 3125.50 and yesterday’s high at 3137.00.

Taking out 3137.00 will indicate the buying is getting stronger. This could trigger a move into the Fibonacci level at 3189.75. Overcoming this level will put the index in a bullish position.

Bearish Scenario

A sustained move under 3042.25 will signal the presence of sellers. This could trigger a retest of the minor retracement zone at 2995.00 to 2961.50, followed by an uptrending Gann angle at 2949.25.

If 2949.25 fails as support then look for the selling to possibly extend into 2865.25, 2877.25 and 2876.75.

Side Notes

The price action suggests sellers are trying to establish a secondary lower top at 3125.50 to 3189.50 and buyers are trying to establish a secondary higher bottom at 2995.00 to 2961.50.

The longer the index remains inside these retracement zones, the bigger the move once traders decide to breakout.

This chart pattern is usually associated with a triangle chart pattern. The top of the triangle today is 3109.50, the bottom is 2949.25.