E-mini S&P Breakout Over 4578.50 Puts 4730.50 on Radar

June E-mini S&P 500 Index futures are trading flat overnight as investors await the release of Tuesday’s consumer confidence data and a big week for labor market data.

The index rose for a third day on Monday, as a sharp climb in shares of Tesla overshadowed weakness in energy and bank stocks, while Russia and Ukraine were poised to hold their first face-to-face peace talks in more than two weeks.

At 03:49 GMT, the benchmark index is trading 4569.25, up 1.25 or +0.03%. On Monday, the S&P 500 Trust ETF (SPY) settled at $455.86, up $3.17 or +0.70%.

The S&P Energy Index, off 2.56%, was the worst-performing sector on the session after oil prices tumbled on the heels of a lockdown in China’s financial hub, Shanghai, to curb a jump in COVID-19 infections that sparked demand worries.

Exxon Mobil Corp lost 2.81% and Chevron Corp fell 1.75%.

Financials were also among the weaker sectors on the session, due in part to a Morgan Stanley downgrade on U.S. banks, which cited escalating risks and the likelihood that rate hikes by the Federal Reserve have already been priced in by the market. The S&P bank index shed 0.99%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the main top at 4578.50 will reaffirm the uptrend.

A trade through 4129.50 will change the main trend to down. This is highly unlikely, however, due to the prolonged move up, the index begins the session inside the window of time for a potentially bearish closing price reversal top.

The main range is 4800.00 to 4094.25. The index is currently trading on the strong side of its retracement zone at 4530.50 to 4447.00, making it support.

The short-term range is 4094.25 to 4574.75. Its retracement zone at 4336.25 to 4279.25 is the next potential downside target. This zone will move up as the index moves higher.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Tuesday is likely to be determined by trader reaction to 4568.00.

Bullish Scenario

A sustained move over 4568.00 will indicate the presence of buyers. Taking out the main top at 4578.50 will reaffirm the uptrend. If this move creates enough upside momentum then look for an acceleration to the upside with the January 12 main top at 4730.50 the next major upside target.

Bearish Scenario

A sustained move under 4568.00 will signal the presence of sellers. The first downside target is the main Fibonacci level at 4530.50.

Buyers could come in on the first test of 4530.50, but if it fails then look for the selling to possibly extend into the main 50% level at 4447.00.

Side Notes

A close under 4568.00 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.