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James Hyerczyk
E-mini S&P 500 Index

September E-mini S&P 500 Index futures are trading slightly lower on Friday shortly before the cash market opening as investors take profits and pare positions ahead of the weekend following an extremely volatile week.

After plunging early in the week on worries over a global economic slowdown, value-seeking investors came in to erase most of the earlier losses and bring the index to within striking distance of last week’s close.

At 12:23 GMT, September E-mini S&P 500 Index futures are trading 2926.25, down 13.75 or -0.47%.

Daily September E-mini S&P 500 Index

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on August 1 at 2775.75.

A trade through yesterday’s high at 2940.75 will indicate the momentum is getting stronger, which would bring the index closer to 3029.50, the all-time high and change in trend level.

A move through 2775.75 will negate the closing price reversal bottom and signal a resumption of the downtrend.

Last week’s close at 2932.50 is offering some resistance today. Furthermore, a closing price reversal bottom against the trend often leads to a 2 to 3 day counter-trend rally equal to 50% to 61.8% of the last break. We’ve accomplished this so the rally could be done. Additionally trend traders could be coming in to form a secondary lower top and set up the next sell-off.

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Daily Technical Forecast

Based on the early price action, the direction of the September E-mini S&P 500 Index is likely to be determined by trader reaction to the uptrending Gann angle at 2924.25.

Bullish Scenario

A sustained move over 2924.25 will indicate the presence of buyers. The first targets are the Fibonacci level at 2932.50 and yesterday’s high at 2940.75. Taking out these levels will indicate the buying is getting stronger with the downtrending Gann angle at 2949.50 the next target.

Look for a technical bounce on the first test of 2949.50. However, taking it out could trigger an acceleration into the next downtrending Gann angle at 2989.50.

Bearish Scenario

A sustained move under 2924.25 will signal the presence of sellers. This could trigger a break into the 50% level at 2902.50. If this fails then look for an acceleration into the main 50% level at 2880.75. This is followed by a steep downtrending Gann angle at 2869.50.

Crossing to the weak side of 2869.50 will indicate the selling pressure is getting stronger. This could lead to a test of the main Fibonacci level at 2845.75.

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