E-mini S&P 500 Index (ES) Futures Technical Analysis – Testing Key Short-Term Retracement Zone at 2922.25 to 2931.50

Now that the dust has cleared after the overnight sell-off, let’s take a look at the June E-mini S&P 500 Index on the daily swing chart. Reading the headlines, it seems a lot of analyst are saying investors were “caught by surprise” by the sharp sell-off, or “investors are panicking”. Let’s not get that excited yet.

The tweets by Trump and the renewed uncertainty over U.S.-China trade negotiations were the surprise, the price action wasn’t. However, there was still some damage done to the charts. It’s all about perception, I suppose. Prior to the steep overnight break, momentum was already trending lower; remember the May 1 closing price reversal top?

What do closing price reversal tops tend to do? They tend to trigger 2 to 3 day counter-trend move, often equal to 50% of a recent range. Well it seems to me that the wheels were already in motion for the sharp break.

At 16:57 GMT, June E-mini S&P 500 Index futures are trading 2917.25, down 30.00 or -1.02%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend turned down early Monday when sellers took out the previous main bottom at 2889.50. The new main top is 2961.25. A trade through this top will change the main trend to up.

The minor trend is also down. A trade through 2949.50 will change the minor trend to up. This will shift momentum to the upside.

The main range is 2789.50 to 2961.25. Its retracement zone at 2875.25 to 2855.00 is the target zone. This zone was nearly tested earlier today, but the selling stopped at 2883.50.

The new minor trend is 2961.25 to 2883.50. Its retracement zone at 2922.50 to 2931.50 is the next upside target. Since the main trend is now down, sellers could come in on the first test of this zone.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the June E-mini S&P 500 Index the rest of the session on Monday is likely to be determined by trader reaction to the short-term 50% level at 2922.50. This level was tested during the day session.

Bearish Scenario

A sustained move under 2922.50 will indicate the presence of sellers. They are trying to form a secondary lower top. If successful, then look for renewed selling pressure and a possible retest of today’s low at 2883.50. If this level fails then look for the selling to extend into the major retracement zone at 2875.25 to 2855.00.

Bullish Scenario

Overcoming 2922.50 and sustaining the move will signal the return of buyers. This could trigger a rally into the Fibonacci level at 2931.50. Sellers could come in on the first test of this level, but if it’s taken out then look for the rally to possibly extend into the minor top at 2949.50. If momentum shifts to the upside then look for another test of 2961.25.