E-mini S&P 500 Still Trying to Build Support Base

James Hyerczyk

The main trend is down, however, momentum has been trending higher since the confirmation of the closing price reversal bottom on January 24.

E-mini S&P 500 Index

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March E-mini S&P 500 Index futures are trading higher late in the session on Friday as bargain hunters continue to try to build a support base in the wake of mixed corporate earnings, geopolitical turmoil and an increasingly hawkish Federal Reserve.

Heightened volatility continues to plague investors with the benchmark index subject to wild intraday swings throughout the week. Given the current price, the index is in a position to post its fourth straight weekly drop.

At 19:52 GMT, March E-mini S&P 500 Index futures are at 4354.75, up 37.00 or +0.86%. The S&P 500 Trust ETF (SPY) is trading $436.48, up $5.24 or +1.22%.

Daily March E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the confirmation of the closing price reversal bottom on January 24.

A trade through 4212.75 will negate the chart pattern and signal a resumption of the downtrend. A move through 4739.50 will change the main trend to up.

The minor trend is also down. A trade through 4446.25 will change the minor trend to up. This will confirm the shift in momentum to up.

On the downside, the current support is a long-term Fibonacci level at 4327.50. This is followed by a long-term retracement zone at 4266.00 to 4137.50. This area stopped the selling on January 24 at 4212.75.

On the upside, a series of retracement levels suggest the next attempt to rally will be a labored event. The first potential resistance is a long-term 50% level at 4419.50.

The first minor range is 4739.50 to 4212.75. Its retracement zone at 4476.00 to 4538.25 is a potential resistance area.

The second minor range is 4808.25 to 4212.75. Its retracement zone at 4510.50 to 4580.75 is another potential resistance area.

Short-Term Outlook

The closing price reversal bottom at 4212.75 seems to have stopped the selling. However, the confirmation of this chart pattern failed to attract enough buyers to sustain the normal 2 to 3 day counter-trend rally. Instead, it stopped at 4446.25.

Taking out 4446.25 will indicate that buyers are slowing regaining control. However, continue to expect several days of two-sided trading as investors try to grind through retracement zone resistance between 4476.25 and 4580.75.

We’re not likely to see an acceleration to the upside until buyers overcome 4580.75 with strong buying volume.

On the downside, aggressive counter-trend buyers could come in on a test of 4266.00 to 4129.00, but if the latter fails as support then we could see another acceleration into multi-month bottoms.

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About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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