E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 3370.25 Sets the Tone

September E-mini S&P 500 Index futures are trading lower but well off its low shortly after the cash market opening, The index was pressured earlier in the session by follow-through selling related to Wednesday’s Fed minutes. Additional selling pressure hit the market on Thursday after weekly jobless claims rose unexpectedly back above the 1 million mark last week, lending weight to the Federal Reserve’s view of a difficult road to economic recovery.

At 13:38 GMT, September E-mini S&P 500 Index futures are trading 3366.75, down 6.00 or -0.18%. This is up from a low of 3344.75.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may have shifted to the downside with the formation of the closing price reversal top on Wednesday and the subsequent confirmation of the potentially bearish chart pattern earlier today.

A trade through 3395.75 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through the nearest swing bottom at 3195.00.

The minor trend is also up. A trade through 3319.50 will change the minor trend to down. This will confirm the shift in momentum to the downside.

The minor range is 3395.75 to 3344.75. Its 50% level at 3370.25 is resistance.

The second minor range is 3195.00 to 3395.75. If the minor trend changes to down then look for the selling to possibly extend into its minor 50% level at 3295.25.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 3366.75, the direction of the September E-mini S&P 500 index into the close is likely to be determined by trader reaction to 3370.25.

Bullish Scenario

A sustained move over 3370.25 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for a possible extension of the rally into yesterday’s high at 3395.75 and the February 20 main top at 3396.50.

Bearish Scenario

A sustained move under 3370.25 will signal the presence of sellers. If this move creates enough downside momentum then look for a retest of the intraday low at 3344.75. This is a potential trigger point for a further decline into the minor bottom at 3319.50. This is followed by the minor 50% level at 3295.25.

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