E-mini S&P 500 Index (ES) Futures Technical Analysis – Overhead Gap at 2229 to 2260 is Early Resistance

June E-mini S&P 500 Index futures gapped lower on Sunday night after a fiscal stimulus bill failed a key procedural Senate vote Sunday as Democrats warned the measure did not do enough to help workers and too much to bail out companies.

Earlier, House Speaker Nancy Pelosi had signaled she was not on board with the Republican-version of the stimulus plan, saying:  “From my standpoint, we’re apart.” However, Senate Minority Leader Chuck Schumer, D-NY, said disagreements over the bill could be overcome in the next 24 hours. A spokesman for Schumer later added the senator and Treasury Secretary Steven Mnuchin had a “productive meeting.”

At 02:17 GMT, June E-mini S&P 500 Index futures are trading 2188.25, down 100.25 or -4.38%.

Earlier in the session, futures hit their “limit down” levels, falling 5%. Last week ended with all 11 S&P 500 sectors closing more than 20% below their respective 52-week highs. The S&P 500 is also on pace for its worst monthly performance since 1940.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 2260.00 reaffirmed the downtrend.

The index is in no position to change the main trend to up, but due to the prolonged move down in terms of price and time, traders should watch for a closing price reversal bottom. This would change the trend to up, but it could trigger a 2 to 3 day short-covering rally.

There is also a resistance gap at 2229.00 to 2260.00.

Daily Technical Forecast

Based on the early price action and the current price at 2188.25, the direction of the futures market during the early session is likely to be determined by trader reaction to the steep downtrending Gann angle at 2235.00.

Bearish Scenario

A sustained move under 2235.00 will indicate the presence of sellers. This should continue to keep the downside pressure on the market into the regular session opening.

Bullish Scenario

A sustained move over 2235.00 will signal the presence of buyers. The first upside target is the top of the gap at 2260.00.

Overtaking 2260.00 will indicate the buying is getting stronger. This could trigger a short-covering rally into Friday’s close at 2288.50.

Turning higher for the session by overtaking 2288.50 will put the index in a position to form a potentially bullish closing price reversal bottom.