E-mini S&P 500 Index (ES) Futures Technical Analysis – Nearing Major Retracement Zone at 2876.75 – 2753.75

March E-mini S&P 500 Index futures finished sharply lower on Thursday after taking out a number of swing bottoms. The sell-off was primarily fueled by a combination of profit-taking and protective sell stops being executed. Given the downside momentum, I’m sure some of the selling was driven by computer algorithms. For those who keep track of these sort of things, the index is down over 10% from its last major top, which puts it in correction territory.

On Thursday, March E-mini S&P 500 Index futures settled at 2957.00, down 153.25 or -5.18%.

Daily March E-mini S&P 500 Index

Daily Technical Analysis

The main trend is down according to the daily swing chart. The main trend will change to up on a move through 3397.50. This is highly unlikely, however.

The market is also down six days from its most recent top at 3397.50. Usually we start looking for closing price reversal bottoms after seven sessions especially when a market is testing a major 50% to 6.18% retracement zone. So we’re going to wait until Monday before we start fishing for a bottom especially with China expected to release its Manufacturing and Non-Manufacturing PMI reports at 01:00 GMT on Saturday. This report could make or break this market on Monday.

The main range is the contract low at 2356.00 from December 24, 2018 and the contract high at 3397.50 from February 20. Its retracement zone is 2876.75 to 2753.75. Trader reaction to this zone should determine the direction of the March E-mini S&P 500 Index into the close on Friday.

Daily March E-mini S&P 500 Index

Early Forecast

We’re seeing some relatively light selling pressure early Friday. If this is able to generate enough downside momentum then look for the selling to extend into the main 50% level at 2876.75. We could see a technical bounce on the first test of this level.

If 2876.75 fails as support then look for the selling to possibly extend into the series of main bottoms at 2855.00, 2818.75 and 2787.00. These are followed by the main Fibonacci level at 2753.75 and another main bottom at 2741.75. Watch for buying at these levels also.

The Fib level at 2753.75 is also the trigger point for a potential acceleration to the downside.

We’re going to learn a lot about how investors feel about this market by how they react to 2876.75 to 2753.75. I know it’s a day early, but I wouldn’t be surprised by a major reversal to the upside following a test of this value zone. It there is no reversal then we could see an attempt to build a support base.

We’re not issuing a buy signal. We’re just saying that a test of 2876.75 to 2753.75 could bring in the bargain-hunters.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.