E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Close Over 3379.75 to Sustain Rally

September E-mini S&P 500 Index futures are expected to open higher based on the pre-market trade. Supporting the rally are bullish earnings reports from Home Depot and Walmart, which are setting an upbeat tone ahead of the cash market opening.

The benchmark futures contract hit a record high during Asian trading hours but later lost steam as caution over a Sino-U.S. spat grew after President Donald Trump announced further restrictions on tech giant Huawei Technologies Co.

At 12:07 GMT, September E-mini S&P 500 Index futures are trading 3384.25, up 4.50 or +0.13%.

Home Depot rose 2.8% in the premarket, putting it in a position to set a record high. Wal Mart shares shot higher by 5.5% in premarket trading.

In other news, retailer Kohl’s lost 25 cents per share for its latest quarter, smaller than the 83 cents a share loss that Wall Street analysts had anticipated. Auto parts retailer Advance Auto Parts earned $2.92 per share for the second quarter, well above the $1.98 a share consensus estimate.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the last high at 3382.50 earlier in the session.

The main trend is safe for now. It will change to down on a move through 3195.00. This is highly unlikely, but due to the prolonged move up in terms of price and time, the index remains inside the window of time for a potentially bearish closing price reversal top.

The new minor range is 3319.50 to 3388.75. Its 50% level at 3354.00 is the nearest support. Look for the short-term upside bias to continue as long as this level holds. This level is dynamic so it will move up if the market continues to make higher-highs.

The short-term range is 3195.00 to 3388.75. The minor trend will change to down on a trade through 3319.50. If it does then momentum will shift to the downside with the retracement zone at 3291.75 to 3269.00 the next likely downside target.

Daily Swing Chart Technical Forecast

Given the early price action, the direction of the September E-mini S&P 500 Index on Tuesday is likely to be determined by trader reaction to 3379.75.

Bullish Scenario

Holding above 3379.75 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to make a run at the February 20 main top at 3396.50. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 3379.75 will signal the presence of sellers. This could trigger a break into the minor 50% level at 3354.00.

A close below 3379.75 will form a closing price reversal top. If confirmed, this could trigger a 2 to 3 day correction.