E-mini S&P 500 Index (ES) Futures Technical Analysis – Reversal Top Will Put 4004.75 on Radar

June E-mini S&P 500 Index futures are trading sharply lower shortly after the cash market opening on Tuesday as soaring oil prices and hawkish comments from a Federal Reserve official spooked investors.

At 13:49 GMT, the benchmark index is at 4109.25, down 46.50 or -1.12%. The S&P 500 Trust ETF (SPY) is trading $410.89, down $4.37 or -1.05%.

The market was pressured overnight by a drop in European shares after Brent crude oil jumped above $123 a barrel. The catalysts behind the rally were the European Union’s decision to partially ban Russian oil and China’s decision to lift some COVID-19 restrictions.

Sellers were also reacting to hawkish comments from a Fed official. On Monday, Fed Governor Christopher Waller said the U.S. central bank should be prepared to raise rates by a half percentage point at every meeting from now on until inflation is decisively curbed.

Investors are now bracing for the outcome of a meeting between U.S. President Joe Biden and Fed Chair Jerome Powell later in the day.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, the early price action suggests momentum may be getting ready to shift to the downside.

A trade through 4202.25 will signal a resumption of the uptrend. A move through 3807.50 will change the main trend to down.

The intermediate range is 4509.00 to 3807.50. Its retracement zone at 4158.25 to 4241.00 stopped the rally at 4202.25 earlier in the session.

The short-term range is 3807.50 to 4202.25. Its retracement zone at 4004.75 to 3958.25 is the next downside target.

Daily Swing Chart Technical Forecast

Trader reaction to 4155.75 is likely to determine the direction of the June E-mini S&P 500 Index into the close on Tuesday.

Bearish Scenario

A sustained move under 4155.75 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for the selling pressure to possibly extend into 4004.75 to 3958.25.

Bullish Scenario

A sustained move over 4155.75 will signal the presence of buyers. Overtaking 4158.25 will indicate the buying is getting stronger. This could create the upside momentum needed to overcome 4202.25, leading to a test of the Fibonacci level at 4241.00.