ES (SPX, SPY) Analysis, Key Levels for Thu (Dec 11th)The recent market decline has evolved into a significant liquidation wave rather than a standard pullback. Following the FOMC's interest rate cut and Jerome Powell's cautious commentary, the E-mini S&P 500 (ES) initially surged to a post-Fed high around 6,908 but then experienced a sharp reversal. The most recent four-hour candle has pushed prices below the prior higher low between 6,835 and 6,840, accompanied by increased trading volume, signaling a definitive break in the short-term market structure.
Although the broader daily trend technically remains upward, the four-hour timeframe has shifted from a consistent upward trajectory to a re-evaluation of prices within the prevailing range. The immediate focal point is now the breached support band of 6,835 to 6,845. Sustaining levels below this range suggests that sellers are firmly in control, potentially steering the market toward the one-hour extension bands around 6,820 to 6,810, and possibly deeper into the 6,800 to 6,780 range.
From a trend and structural perspective, the four-hour chart has registered a new lower low beneath the previous swing base, effectively ending the sequence of higher lows that supported the market’s advance since late November. Meanwhile, the one-hour chart indicates a downward trend characterized by a series of lower highs and lower lows, with the price approaching the 1.272 to 1.618 extension levels, approximately at 6,820 and 6,810, exhibiting strong momentum.
Unless ES can reclaim and sustain levels above the broken 6,835 to 6,845 band, the short-term outlook remains decidedly bearish.
The primary catalyst for today's market movement is clear: the Federal Reserve has opted for a modest interest rate reduction while signaling a careful, data-dependent path for future easing. Given that equity indices had been trading at elevated levels anticipating a more dovish stance, the Fed's communication has prompted a necessary recalibration. Today's trading session illustrates this shift, with both the E-mini S&P (ES) and E-mini Nasdaq (NQ) experiencing a concurrent decline, effectively erasing the gains observed following the recent FOMC meeting.
Overnight Market Forecast
As the E-mini S&P 500 (ES) continues to trade within the critical range of 6,835 to 6,845, the prevailing outlook remains bearish.
Base Case Scenario: Should the ES maintain its trajectory downward, we anticipate a gradual decline towards the S1 support level at 6,820 - 6,810. A decisive hourly close below 6,810 would bring S2 into play, targeting the 6,800 - 6,780 range. Should the selling pressure persist, the market may extend its reach into the broader 6,760 - 6,733 4-hour extension band in the coming sessions.
Conversely, if buyers successfully defend the 6,820 - 6,810 levels and tomorrow's economic data proves favorable, we are likely to see a reactionary bounce towards the 6,835 - 6,845 resistance zone. This area will become crucial: a rejection here would likely signal the onset of another leg down, while a firm reclaim and a 4-hour close above 6,845 could indicate that the recent selloff is merely part of a larger trading range, rather than signaling a complete trend reversal.
Directional Bias: In the short term, the sentiment remains bearish below the 6,835 - 6,845 range, with key downside targets at 6,820 - 6,810, followed by 6,800 - 6,780, and ultimately the 6,760 - 6,733 level.
