E-mini S&P 500 Index (ES) Futures Technical Analysis – Reversal Top Triggers Momentum Shift

June E-mini S&P 500 Index futures gave up some of its monthly gains on Thursday to finish lower as grim economic data and mixed earnings prompted investors to take profits at the close of the cash index’s best month in 33 years, a remarkable run driven by expectations the economy will soon start recovering from crushing restrictions enacted to curb the coronavirus pandemic.

On Thursday, June E-mini S&P 500 Index futures settled at 2902.50, up 38.50 or +1.33%.

Despite Thursday’s losses, the S&P 500 remained on track to post one of its best monthly performances since World War II. The broader market average is up about 13% in April. That would be its biggest one-month gain since January 1987 and third-biggest monthly jump since the Second World War.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, the closing price reversal top indicates momentum may be getting ready to shift to the downside. This chart pattern won’t change the trend to down, but it could lead to a 2 to 3 correction.

A trade through 2965.00 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 2717.25 will change the main trend to down.

The main range is 3397.75 to 2174.00. The market is currently trading inside its retracement zone at 2785.75 to 2930.25. This zone is controlling the longer-term direction of index.

The minor range is 2717.25 to 2965.00. The first downside target is its 50% level at 2841.00.

The intermediate range is 3131.00 to 2174.00. Its retracement zone at 2765.50 to 2652.50 is the next downside target zone.

The major support is the price cluster at 2785.75 to 2765.50.

Daily Swing Chart Technical Forecast

Based on Thursday’s price action and the close at 2902.50, the direction of the June E-mini S&P 500 Index on Friday will be determined by trader reaction to Thursday’s low at 2878.00.

Bearish Scenario

A sustained move under 2878.00 will confirm the closing price reversal top. The first target is the minor 50% level at 2841.00. If this fails then look for a potential break into the support cluster at 2785.75 to 2765.50.

Bullish Scenario

A sustained move over 2878.00 will indicate the return of buyers. If this creates enough upside momentum then look for a rally into the Fibonacci level at 2930.25, followed by the closing price reversal top at 2965.00.