E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 3504.50 Sets the Tone

September E-mini S&P 500 Index futures are trading lower shortly after the cash market opening on Monday. Earlier in the session, the index hit a record high for the sixth straight session, as bets on an economic revival due to prolonged central bank support put it on course for its best August in decades.

At 13:30 GMT, September E-mini S&P 500 Index futures are trading 3502.75, down 1.75 or -0.05%.

The Federal Reserve’s commitment to tolerate and keep interest rates low, positive developments in vaccines and treatments for COVID-19 and a momentum-driven rally in tech-focused stocks have helped the S&P 500 hit consecutive all-time highs recently.

During the pre-market session, Apple Inc and Tesla Inc rose about 0.8% each, as their stocks became less costly after their pre-announced stock splits took effect.

Meanwhile, suitors for TikTok’s U.S. assets, Microsoft, Walmart Inc and Oracle Corp, dropped between 2.0% and 2.5% as China’s new rules around tech exports meant a deal with ByteDance could need Beijing’s approval.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out Friday’s high on its way to a new all-time high.

The main trend will change to down on a move through the nearest main bottom at 3195.00. This is highly unlikely, but due to the prolonged move up in terms of price and time, the index is inside the window of time for a potentially bearish closing price reversal top chart pattern.

The minor trend is also up. A trade through 3344.75 will change the minor trend to down. This will shift momentum to the downside.

The minor range is 3344.75 to 3524.50. If the selling pressure continues then its retracement zone at 3434.50 to 3413.50 will become the primary downside target.

Daily Swing Chart Technical Forecast

Based on the early price action and the current 7 day rally, the direction of the September E-mini S&P 500 Index session today is likely to be determined by trader reaction to Friday’s close at 3504.50.

Bullish Scenario

A sustained move over 3504.50 will indicate the presence of buyers. Taking out the intraday high at 3524.50 will indicate the buying is getting stronger. This could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 3504.50 will signal the presence of sellers. A close under this level will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction, but no necessarily a change in trend.