E-mini S&P 500 Index (ES) Futures Technical Analysis – August 23, 2019 Forecast

September E-mini S&P 500 Index futures are trading lower shortly before the cash market opening on Friday. The market had been trading higher throughout the pre-market session, but erased those gains after China said it will slap new tariffs on U.S. goods.

China said it would retaliate with new tariffs on another $75 billion worth of U.S. goods, including autos. The tariffs will range between 5% and 10% and will be implemented in two batches on September 1 and December 15.

At 12:40 GMT, September E-mini S&P 500 Index futures are trading 2909.00, down 13.25 or -0.46%.

All of this is taking place ahead of a keynote speech by Federal Reserve Chairman Jerome Powell at 10:00 GMT. In addressing a crowd of global central bankers in Jackson Hole, Wyoming, Powell will likely talk about stock market volatility and the recent yield curve inversion, however, investors want to know if he sees a rate cut in September, or a series of rate cuts over the next 12 months.

The market is pricing in a 25-basis point rate hike for September, and as many as 4 over the next 12 months. Powell has to deliver a message with clarity and conviction that meets or exceeds market expectations, or stocks are likely to plunge. This will be especially true if he just reiterates the Fed’s “mid-cycle adjustment” narrative.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 2944.25 will change the main trend to up. A move through 2817.75 will signal a resumption of the downtrend.

The short-term range is 3029.50 to 2775.75. Its retracement zone at 2902.50 to 2932.50 is acting like resistance.

The main retracement zone is 2880.75 to 2845.75. This zone is potential support. It’s also controlling the near-term direction of the index.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price and the current price at 2909.00, the direction of the September E-mini S&P 500 Index on Friday is likely to be determined by trader reaction to the 50% level at 2902.50 and the Fibonacci level at 2932.50.

Bullish Scenario

A sustained move over 2932.50 will indicate the presence of buyers. Taking out 2939.75 will indicate the buying is getting stronger and a move through 2944.25 will change the main trend to up.

If enough buyers come in on the move over 2944.25 then this could trigger an acceleration to the upside with the next major target the July 26 top at 3029.50.

Bearish Scenario

A sustained move under 2902.50 will signal the presence of sellers. This could trigger a quick break into the main 50% level at 2880.75. We could see a bounce on the first test of this level.

If 2880.75 fails as support then look for an acceleration to the downside with the Fibonacci level at 2845.75 the next downside target. Once again buyers could come in to produce a technical bounce.

The index will weaken considerably if 2845.75 fails as support. This could trigger a break into the main bottom at 2817.75. This is another trigger point for an acceleration to the downside with the main bottom at 2775.75 the primary target. Taking out this level will confirm the change in trend and possibly lead to a test of the June 3 bottom at 2732.25.