E-mini S&P 500 Index (ES) Futures Technical Analysis – Sellers Regain Control on Fed Rate Hike Fears

June E-mini S&P 500 Index futures closed lower on Friday after a strong jobs report dampened hopes for a pause in the Federal Reserve’s aggressive policy-tightening which is needed to cool decades-high inflation.

Shortly before the cash market opening, the Labor Department released its closely watched report which showed nonfarm payrolls rose by 390,000 jobs last month and wages grew modestly, while the unemployment rate held steady at 3.6% – all signs of a tight labor market.

Economists polled by Reuters had forecast that nonfarm payrolls would rise by 325,000 jobs.

On Friday, the June E-mini S&P 500 Index settled at 4107.00, down 68.25 or -1.66%. The S&P 500 Trust ETF (SPY) finished at $410.58, down $6.81 or -1.63%.

While the jobs report was reassuring for the current state of the economy, investors focused primarily on its potential influence on central bank policy. The report indicated the economy is in fairly good shape, but that opens it up to further tightening from the Fed.

The jobs data was a negative for the stock market because investors were hoping it would come in weak enough for the Fed to consider pausing its rate hike plans later in the year.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. 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 minor trend is also up. A trade through 4071.50 will change the minor trend to down. This will shift the momentum.

The main range is 4509.00 to 3807.50. Its retracement zone at 4158.25 to 4241.00 is resistance. It stopped the rally last week at 4202.25.

The short-term range is 3807.50 to 4202.25. If the minor trend changes to down then look for the selling to possibly extend into its retracement zone at 4004.75 to 3958.25.

Daily Swing Chart Technical Forecast

Trader reaction to 4158.25 is likely to determine the direction of the June E-mini S&P 500 Index on Monday.

Bearish Scenario

A sustained move under 4158.25 will indicate the presence of sellers. The first downside target is the minor bottom at 4071.50.

Taking out 4071.50 will shift momentum to the downside with 4004.75 to 3958.25 the next target area.

Bullish Scenario

A sustained move over 4158.25 will signal the presence of buyers. This move could create the momentum needed to challenge the minor top at 4202.25, followed by the main Fibonacci level at 4241.00.