E-mini S&P 500 (ES) Index Futures Technical Analysis – Trade to 4515.25 Shifts Momentum to Lower
December’s E-mini S&P 500 index futures ended lower on Friday, under pressure from weak communications and tech sectors, following disappointing quarterly reports from Snap Inc and Intel Corp. Sellers have also been encouraged to reduce their positions following potentially hawkish remarks from Federal Reserve Chairman Jerome. Powell, where he discussed the reduction in stimulus and the timing of future rate hikes.
On Friday, December’s E-mini S&P 500 index futures stood at 4,536.50, down 5.25 or -0.12%.
In stock market news, Snap shares have fallen more than 25% and its report has prompted shareholders to quit larger advertising-dependent communications firms such as Facebook Inc and Twitter Inc, both of which have closed about 5%.
Intel shares fell nearly 12% after the computer chip maker missed third-quarter sales expectations, while its CEO stressed that the chip shortage was holding back sales of its flagship processors.
Technical analysis of the daily swing chart
The main trend is upward on the daily swing chart. The uptrend was reaffirmed on Friday as buyers broke through the previous high at 4543.25.
A trade up to 4260.00 will change the main downtrend. This is highly unlikely, but the formation of the closing price reversal top suggests that momentum may be preparing to tip lower.
A move up to 4551.50 will cancel the reversal top of the closing price and signal a resumption of the uptrend. A move up to 4515.25 will confirm the potentially bearish chart pattern.
Confirmation of the closing reversal top will not change the main downtrend, but it will change downward momentum and could trigger the start of a 2-3 day correction. If the selling pressure is strong enough, we could see a 50% correction in the minor and major ranges.
The minor range is 4317.25 to 4551.50. Its 50% level at 4434.25 is the next potential target on the downside.
The main range is 4260.00 to 4551.50. If the minor 50% level fails, look for the sell to eventually expand to its retracement area between 4405.75 and 4371.25.
Short term outlook
The formation of the closing price reversal top indicates that the uptrend will likely resume on a sustained move above 4551.50 and a countertrend sell may start on a sustained move below 4515.25.
For an overview of all of today’s economic events, check out our economic calendar.
This article originally appeared on FX Empire