E-mini S&P 500 Index (ES) Futures Technical Analysis – Reaction to Fed Intervention Fizzles

March E-mini S&P 500 Index futures are trading sharply lower late in the session while hovering just above the low of the day even after the Federal Reserve announced extraordinary funding action to ease strained capital markets in the wake of the coronavirus sell-off. According to reports, the Fed announced it will ramp up its overnight funding operations to more than $500 billion.

At 18:16 GMT, March E-mini S&P 500 Index futures are trading 2536.00, down 204.25 or -7.45%.

There was a technical bounce after the Fed made its move, but that initial thrust fizzled just as fast as it started. I think the price action suggests investors feel that throwing money at the market is not going to work like it did in 2009. That issue was houses and credit, this one is about a virus.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 2492.25 will signal a resumption of the downtrend. The main trend will change to up on a move through 3137.00.

The main range is 2356.00 to 3397.50. Its retracement zone at 2754.00 to 2876.75 is new resistance. Trading below this zone is also helping to generate a strong downside bias.

Daily Technical Forecast

Based on the early price action and the current price at 2536.00, the direction of the March E-mini S&P 500 Index into the close on Thursday is likely to be determined by trader reaction to a long-term uptrending Gann angle at 2508.25.

Bearish Scenario

A sustained move under 2508.25 will indicate the selling is getting stronger. This could trigger a further decline into the next uptrending Gann angle at 2431.25. This is the last potential support angle before the 2356.00 main bottom from December 24, 2018.

Bullish Scenario

A sustained move over 2508.25 will suggest the presence of aggressive counter-trend buyers. If this move is able to generate enough upside momentum into the close then we could see a surge into the nearest resistance cluster at 2661.25 to 2689.00.