E-mini S&P 500 Index (ES) Futures Technical Analysis – Benchmark Enters Bear Market Territory

June E-mini S&P 500 Index futures are trading sharply lower shortly after the mid-session on Friday. The selling pressure was strong enough to take out this week’s low, putting the benchmark index in bear market territory. This is the first bear market to hit the markets since the rapid decline in March 2020 at the onset of the pandemic.

The bear market was recognized when the S&P 500 Index declined 20% from its all-time high in January earlier in the session. Investors blamed rising recession fears for today’s sell-off. However, the overall downtrend has been fueled by the Fed aggressive monetary policy.

At 17:42 GMT, June E-mini S&P 500 Index futures are trading 3825.75, down 72.00 or -1.85%. The S&P 500 Trust ETF (SPY) is at $383.55, down $5.91 or -1.52%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 3807.50 will signal a resumption of the downtrend. A move through 4095.00 will change the main trend to up.

The minor trend is also down. A trade through 3949.50 will change the minor trend to up. This will shift momentum to the upside.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index into the close on Friday will be determined by trader reaction to 3898.25.

Bearish Scenario

A sustained move under 3898.25 will indicate the presence of sellers. Taking out the intraday low at 3807.50 will indicate the selling pressure is getting stronger. This move could trigger an acceleration into the Mach 8, 2021 main bottom at 3759.50.

Bullish Scenario

A sustained move over 3898.25 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the intraday high at 3949.50. Taking out this level could trigger an acceleration to the upside on aggressive short-covering.

Side Notes

Due to the prolonged move down in terms of price and time, a close over 3898.25 will form a closing price reversal bottom. If confirmed, this could trigger the start of a 2-3 day retracement.