E-mini S&P 500 Index (ES) Futures Technical Analysis – Swing Chart Points to 2732.50 by May 29

The benchmark S&P 500 Index is trading sharply lower as we approach the last hour of trading on Thursday. The selling is being driven by persistent worries over an escalation of the trade dispute between the United States and China. Helping to extend losses was a disappointing IHS Market manufacturing purchasing managers’ report. It showed U.S. manufacturing activity grew at its slowest pace since September 2009 in May.

At 19:41 GMT, June E-mini S&P 500 Index futures are trading 2817.50, down 40.00 or -1.40%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 2799.75 will signal a resumption of the downtrend. The main trend will change to up on a move through 2894.00.

The main range is 2726.50 to 2961.25. Its retracement zone at 2844.00 to 2816.00 is currently being tested. This zone is controlling the near-term direction of the index.

The short-term range is 2961.25 to 2799.75. Its retracement zone at 2880.50 to 2899.50 is resistance. It stopped the rally at 2894.00 last week. I warned over the week-end that prices could plunge if this price became a new secondary lower top. It looks like this pattern is developing so look out to the downside.

Daily Swing Chart Technical Forecast

Based on the late session price action, the direction into the close is likely to be determined by trader reaction to the main Fibonacci level at 2816.00.

Bearish Scenario

A sustained move under 2816.00 will indicate the selling is getting stronger. Taking out the two main bottoms at 2799.75 and 2789.50 will reaffirm the downtrend. This could trigger an acceleration to the downside with the next major targets 2726.50 to 2716.00.

The first leg of this break was 2961.25 to 2799.75 or 161.50 points. If 2894 is the new secondary lower top then a 161.50 break will take the index to 2732.50 by next Wednesday, May 29.

Bullish Scenario

Holding the bottoms at 2799.75 and 2789.50 and regaining the Fibonacci level at 2816.00 will mean there is still life in the index. This could trigger a rally into the 50% level at 2844.00.

Overview

The first leg down from 2961.25 to 2799.75 was long liquidation. So following the normal 50% to 61.8% retracement to 2894.00, we should be looking a real shorting. If all goes as planned for the short-sellers then look for an eventual break into 2732.50, 2726.50 and 2716.00.