E-mini S&P 500 Index (ES) Futures Technical Analysis – Cautious Tone Makes Index Ripe for Reversal Top

June E-mini S&P 500 Index futures are expected to open higher on Wednesday as hopes of an economic recovery eclipsed worries over simmering tensions between the United States and China.

The more than two month rally is also being fueled by unprecedented fiscal and monetary stimulus, the easing of coronavirus-related lockdowns and optimism about an eventual COVID-19 vaccine.

At 13:05 GMT, the June E-mini S&P 500 Index is trading 3021.50, up 27.00 or +0.90%.

Despite the market’s strength, investors are still facing some headwinds. President Donald Trump said the United States would announce before the end of the week its response to China’s planned national security legislation for Hong Kong.

In other news, travel-related stocks, which were among the worst hit in the sell-off earlier this year, continued to outperform. United Airlines Holdings, Inc., American Airlines Group Inc. rose more than 7% in the premarket trade.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out yesterday’s high. A trade through 2903.75 will change the main trend to down.

The main range is 3397.75 to 2174.00. Its retracement zone at 2930.25 to 2785.75 is controlling the longer-term direction of the index, making it major support.

Daily Swing Chart Technical Forecast

There is no resistance until 3131.00 so we have to watch the chart pattern. That being said, the direction of the June E-mini S&P 500 Index the rest of the session on Wednesday is likely to be determined by trader reaction to yesterday’s close at 2994.50.

Bullish Scenario

A sustained move over 2994.50 will indicate the presence of buyers. If this continues to generate enough upside momentum then we should see an eventual test of the March 3 main top at 3131.00.

Bearish Scenario

A sustained move under 2994.50 will signal the return of buyers. This would change the trend to down, but it could form a closing price reversal top. This could lead to a 2 to 3 day correction.

In the meantime, the first downside target is the major Fibonacci level at 2930.25, followed by the main bottom at 2903.75.

For a look at all of today’s economic events, check out our economic calendar.