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September E-mini S&P 500 Index futures posted a new record high and close last week, taking out the main top formed in late January. Optimism over a robust U.S. economy, fueled by better-than-expected preliminary third quarter GDP data, helped support higher prices. The announcement of a new trade deal between the United States and Mexico also helped drive up the index.
Weekly Technical Analysis
The main trend is up according to the weekly swing chart. A trade through last week’s high at 2917.50 will signal a resumption of the uptrend. There is no resistance above this level so it’s likely going to be a chart pattern that stops the rally.
A move under the old main top at 2889.00 will indicate that the selling may be greater than the buying at current price levels.
The minor trend is also up. A trade through 2803.00 will change the minor trend to down. This will also shift momentum to the downside.
The market is not in a position to change the trend to down, however, it is up 10 weeks from the last main bottom, which means it is in the window of time for a potentially bearish closing price reversal top. This chart pattern will not change the trend to down, but it could fuel the start of a 2 to 3 week correction.
Weekly Technical Forecast
Given the current chart pattern and the strong upside momentum, the direction of the September E-mini S&P 500 Index this week is likely to be determined by trader reaction to last week’s high at 2917.50.
A sustained move over 2917.50 will indicate the presence of buyers. If the buying is strong enough, the rally could keep going since there is no resistance.
A sustained move under 2917.50 will signal the presence of sellers. Falling below the previous top at 2889.00 will indicate the selling is getting stronger. If this generates enough downside momentum then look for the selling to extend into an uptrending Gann angle at 2853.25. Look for a technical bounce on the first test of this angle.
If the angle at 2853.25 fails to hold then prepare for an even sharper break with 2803.00 the next target.
Additionally, taking out 2917.50 then turning lower for the week on a trade through last week’s close at 2902.00 will be another sign of weakness. This will put the index in a position to form a potentially bearish closing price reversal top.
This article was originally posted on FX Empire