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James Hyerczyk
E-mini S&P 500 Index

June E-mini S&P 500 Index futures are trading lower after the mid-session on Tuesday. The price action puts the market’s six day winning streak at risk. During the pre-market session, the index touched its highest level since May 7, but a muted producer price report seems to have encouraged profit-taking.

Continuing to underpin the market was the resolution of the issues between Mexico and the United States and hopes of lower interest rates when the Federal Reserve meets next week. However, the price action suggests the rally may be losing steam.

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At 19:16 GMT, June E-mini S&P 500 Index futures are trading 2885.00, up 4.25 or +0.15%. The high of the session is 2911.50.

Daily June E-mini S&P 500 Index

Daily Technical Analysis

The main trend is up according to the daily swing chart. It turned up on Monday when buyers took out the previous top at 2894.00. A break back under this price will be a sign of weakness. This will indicate that the rally over this level was more short-covering than new buying.

If 2894.00 can hold then this will indicate the buyers are entering the market with conviction. This may create the upside momentum needed to eventually challenge 2961.25.

The market is only up six session, but due to the steepness of the rally, it may be in a position to form a potentially bearish closing price reversal top. Look for the selling pressure to intensify if it turns lower for the session.

If formed, a closing price reversal top could lead to a 2 to 3 day correction.

The market is also trading on the weak side of a steep Gann angle, moving up at a rate of 32 points per day. This angle comes in at 2920.75. Crossing to the weak side of this angle means upside momentum is slowing.

The main range is 2961.25 to 2728.75. Its retracement zone at 2872.50 to 2845.00 is the nearest support zone. This zone is controlling the near-term direction of the market.


Daily Technical Forecast

Based on the early price action, the direction of the June E-mini S&P 500 Index the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at 2905.25.

Bullish Scenario

A sustained move over 2905.25 will indicate the presence of buyers. If this move generates enough upside momentum then look for buyers to go after 2920.75.

Overtaking 2920.75 will put the index in a strong position with the next target angle coming in at 2933.25. This is the last potential resistance angle before the 2961.25 main top.

Bearish Scenario

A sustained move under 2905.25 will signal the presence of sellers. If this creates enough downside momentum then look for a possible break into 2872.50. We could see a technical bounce on the first test of this level. If it fails then look for the selling to possibly extend into the 50% level at 2845.00.

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