E-mini S&P Breakout Over 4427.50 Shifts Momentum to Upside

March E-mini S&P 500 Index futures are trading higher shortly after the cash market opening on Wednesday as investors await the outcome of a Federal Reserve policy meeting at 19:00 GMT.

The price action the first three weeks of the new year suggests as many as four Fed rate hikes could already be priced in.  Meanwhile, new worries have emerged with a possible escalation of the tension between Russia and Ukraine.

At 14:21 GMT, March E-mini S&P 500 Index futures are trading 4405.75, up 56.75 or +1.30%. On Tuesday, the S&P 500 Trust ETF (SPY) settled at $434.42, down $5.42 or -1.23%.

The technology and energy sectors are providing the most support for the benchmark index. Technology shares rallied in early morning trading following Microsoft’s earnings report. Apple, Amazon, Netflix and Nvidia all traded higher.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum may be getting ready to shift to the upside. A trade through 4739.50 will change the main trend to up.

On Monday, the index formed a potentially bullish closing price reversal bottom. A trade through 4427.50 will confirm the chart pattern. This could trigger the start of a 2 to 3 day correction.

A trade through 4212.75 will negate the closing price reversal top and signal a resumption of the downtrend.

Daily Swing Chart Technical Forecast

The direction of the March E-mini S&P 500 Index into the close on Wednesday will be determined by trader reaction to 4320.25.

Bullish Scenario

A sustained move over 4320.25 will indicate the presence of buyers. Taking out 4419.50 and 4427.50 will indicate the buying is getting stronger. This could trigger the start of a 2 to 3 day rally into a cluster of resistance levels at 4476.25, 4510.50, 4538.25 and 4580.75.

Since the main trend is down, look for sellers to re-emerge on a test of 4476.25 to 4580.75. It’s a wide range because of the heightened volatility.

Bearish Scenario

A sustained move under 4320.00 will signal the presence of sellers. This could trigger a further break into 4266.00, followed by a support cluster at 4215.00 – 4212.75.

Taking out 4212.75 could trigger an acceleration into another support cluster at 4137.50 – 4129.00.