E-mini S&P 500 Index (ES) Futures Technical Analysis – Weekly Rally Strengthens Over 2857.25

June E-mini S&P 500 Index futures settled sharply higher last week, reversing the weakness from the prior week, which almost brought an end to the nearly 3-month rally. The benchmark index was boosted by the hope of a U.S.-China trade deal, soft U.S. economic data which likely means the U.S. Federal Reserve will continue its accommodative policy and strong gains in the technology sector.

This week’s direction will be largely determined by the Fed’s policy decision on Wednesday. The central bank is expected to keep interest rates at current price levels and maintain its policy to remain “patient’ about future rate hikes. Furthermore, it could also become more accommodative if its economic projections reduce the number of rate hike it expects in 2019.

Last week, June E-mini S&P 500 Index futures settled at 2829.75.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart, however, momentum is trending higher. A trade through 2961.25 will change the main trend to up.

Due to the prolonged rally in terms of price and time, the week begins with the index in a position to post a potentially bearish closing price reversal top.

The minor trend is up. This is helping to generate the upside momentum. A trade through 2726.50 will change the main trend to down. This will also shift momentum to the downside.

The main range is 2961.25 to 2319.25. Its retracement zone is 2716.00 to 2640.25. This zone is controlling the longer-term direction of the index. Traders should treat this zone as support.

Weekly Technical Forecast

Based on last week’s upside momentum and the close at 2829.75, the direction of the June E-mini S&P 500 Index this week is likely to be determined by trader reaction to the downtrending Gann angle at 2909.25.

Bullish Scenario

Taking out 2909.25 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for the rally to extend into the next downtrending Gann angle at 2857.25. Overcoming this angle could drive the index into the next downtrending Gann angle at 2935.25. This is the last potential resistance angle before the 2961.25 main top and contract high.

Bearish Scenario

The inability to overcome the downtrending Gann angle at 2857.25 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the next downtrending Gann angle at 2753.25.

If 2753.25 fails as support then look for further weakness with the next potential targets a minor bottom at 2726.50, the major Fibonacci level at 2716.00 and the steep uptrending Gann angle at 2703.25.

Closing Price Reversal Top Set-Up

Taking out 2836.50 then turning lower for the week will put the index in a position to form a potentially bearish closing price reversal top. This could trigger the start of a 2-3 week counter-trend sell-off.