E-mini S&P 500 Index (ES) Futures Technical Analysis – Filling Gap Will Be Sign of Developing Weakness

September E-mini S&P 500 Index futures are expected to open higher on Wednesday as signs of progress in developing a COVID-19 vaccine and a much better-than-expected quarterly profit for Goldman Sachs brightened trader optimism.

Big bank rallies are behind much of today’s early gains with Goldman jumping 4.6% before the bell as its trading revenue doubled in the second quarter, driven by big swings in stock and bond markets since March.

Morgan Stanley gained 2.8% and Bank of America rose 2.8% ahead of their results on Thursday which would wrap up earnings from the big six U.S. banks.

At 13:33 GMT, September E-mini S&P 500 Index futures are trading 3224.75, up 41.25 or 1.30%.

Moderna Inc surged 16% after a small-scale study showed its experimental COVID-19 vaccine produced high levels of virus-killing antibodies, bolstering hopes the shot could prove effective in later stages of testing.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trade through Monday’s high at 3226.25 reaffirmed the uptrend. The main trend will change to down on a trade through 3105.25.

The minor trend is also up. The minor trend changes to down on a move through 3119.00. This will shift momentum to the downside.

Daily Swing Chart Technical Forecast

Even though the index took out Monday’s closing price reversal top earlier today, it is still in the window of time to form this potentially bearish chart pattern. This means yesterday’s close at 3183.50 is controlling the price action.

Bullish Scenario

A sustained move over 3183.50 will indicate the presence of buyers. Holding above the tiny gap at 3198.00 to 3192.25 will also be a sign of strength. There is no resistance until the all-time high at 3396.50 although there is another small gap at 3300.75 to 3327.75.

Bearish Scenario

A sustained move under 3183.50 will signal the presence of sellers. If this creates enough downside momentum then we could see an acceleration into 3119.00 and 3105.25. Taking out the latter will change the main trend to down. This could cause an even steeper break.

A close under 3183.50 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

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