E-mini S&P 500 Index (ES) Futures Technical Analysis – Short-Covering Ahead of Friday’s NFP Report

September E-mini S&P 500 Index futures are trading higher early Friday as investors attempt to claw back last week’s losses. The selling pressure was primarily fueled by fears that rapidly rising interest rates would slow the economic growth more than desired.

At 02:53 GMT, September E-mini S&P 500 Index futures are at 3841.25, up 28.25 or 0.74%. Last Friday, the S&P 500 Trust ETF (SPY) settled at $381.20, up 3.95 or +1.05%.

Ahead of the start of the holiday shortened week, investors are gearing up for the release of the June U.S. Non-Farm Payrolls report on Friday.

This week’s economic calendar also includes Wednesday’s release of minutes from the Federal Reserve’s latest meeting. May factory orders are expected for Tuesday, with earnings from WD-40 and Levi Strauss scheduled for Friday.

The Fed will decide monetary policy and likely raise its benchmark rate by 75 basis points on July 27. Until then every U.S. economic report will be scrutinized especially the jobs data and consumer inflation.

Earnings season is also expected to start around June 15 with many companies expected to lower forward guidance.

Short-Term Outlook

Trader reaction to the short-term 50% level at 3845.75 is likely to determine the direction of the September E-mini S&P 500 Index early Tuesday.

Bullish Scenario

A sustained move over 3845.75 will indicate the presence of counter-trend buyers. This could trigger a quick surge into the short-term Fibonacci level at 3870.25.

Since the main trend is down, sellers could come in on a test of 3845.75 to 3870.25. Overtaking 3870.25, however, could trigger an acceleration into the intermediate 50% level at 3922.00. This is the last potential resistance before the 3950.00 main top.

Bearish Scenario

A sustained move under 3845.75 will signal the presence of sellers. They are going to try to form a potentially bearish secondary lower top. If successful, this could lead to a retest of the retracement zone at 3794.50 to 3757.75. This is the last potential support before the 3741.25 main bottom.

Taking out 3741.25 will reaffirm the downtrend, which could trigger an acceleration to the downside with 3639.00 the next major target.