E-mini S&P 500 Index (ES) Futures Technical Analysis – Reaction to 4215.50 Pivot Determines Direction

September E-mini S&P 500 Index futures are inching higher shortly before the cash market opening on Friday. The move has put the benchmark index in a position for its fourth positive week in a row on the hope that inflation is peaking.

In the cash market, the S&P 500 Index is up 1.5% on the week, helped mostly by a rally earlier in the week after a government report revealed softer-than-expected consumer inflation. The move was validated by Thursday’s similar producer inflation report.

At 12:58 GMT, September E-mini S&P 500 Index futures are trading 4231.00, up 21.25 or +0.50%. On Thursday, the S&P 500 Trust ETF (SPY) settled at $420.01, up $0.02 or +0.01%.

In stock related news, electric vehicle maker Rivian beat top- and bottom-line estimates, but trimmed its full-year guidance. Poshmark, Olo and Illumina shares traded lower after posting earnings results.

On the data front, the University of Michigan consumer sentiment survey for August will be out at 14:00 GMT, and investors will be watching the inflation component with particular interest.

Economists surveyed by Dow Jones expect the survey to register a 52.5 reading, a slight improvement from July’s 51.1 and just off the historic low of 50 reached in June.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Thursday’s closing price reversal top is an early sign that momentum may be getting ready to shift to the downside.

A trade through 4202.75 will confirm the closing price reversal top. This won’t change the main trend to down, but it could trigger the start of a 2 to 3 day correction. A move through 4260.50 will negate the potentially bearish chart pattern and signal a resumption of the uptrend.

The minor trend is also up. A trade through 4103.75 will change the minor trend to down. This will confirm the shift in momentum.

The long-term trading range is 4792.00 to 3639.00. The index is currently testing its retracement zone at 4215.50 to 4351.50. This zone stopped the rally at 4260.50 on Thursday.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at 4215.50 is likely to determine the direction of the September E-mini S&P 500 Index on Friday.

Bullish Scenario

A sustained move over 4215.50 will indicate the presence of buyers. Taking out 4260.50 with conviction could trigger an acceleration into the April 28 main top at 4308.50, followed by the long-term Fibonacci level at 4351.50.

Bearish Scenario

A sustained move under 4215.50 will signal the presence of sellers. Taking out yesterday’s low at 4202.75 will confirm the closing price reversal top. The first downside target is a minor pivot at 4186.75. If this level fails as support then look for the selling to possibly extend into a pair of minor bottoms at 4103.75 and 4080.50.