E-mini S&P 500 Index (ES) Futures Technical Analysis – Testing Next Major Challenge at 3922.00 to 3988.75

September E-mini S&P 500 Index futures are trading sharply higher at the mid-session on Tuesday amid optimism about upcoming earnings season, with a majority of the benchmark index’s companies beating expectations so far this season.

All sectors in the S&P 500 were higher Tuesday. Bank stocks outperformed with shares of Goldman Sachs rising more than 4% following a strong earnings report Monday. Bank of America climbed nearly 3%, and Wells Fargo gained about 3%.

At 17:15 GMT, September E-mini S&P 500 Index futures are trading 3916.50, up 82.75 or +2.16%. The S&P 500 Trust ETF (SPY) is at $390.22, up $8.27 or +2.17%.

The rebound on Wall Street on Tuesday comes as traders make another attempt at bargain hunting after the rally seen in early trading on Monday faded as the day progressed.

Besides robust earnings expectations. Investors are also reacting to a drop in the chances of a 100 basis point rate hike by the Fed at next week’s policy meeting. They’re now adjusting positions to reflect a 75 basis point rate hike.

In economic news, traders largely shrugged off a report from the Commerce Department, unexpectedly showing a continued decline in housing starts in June.

Daily September E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 3922.00 will change the main trend to up. A move through 3723.75 will signal a resumption of the downtrend.

The intermediate range is 4204.75 to 3639.00. Its retracement zone at 3922.00 to 3988.75 is the next upside target and potential resistance. This zone stopped rallies at 3922.00 and 3950.00 over the last month.

On the downside, potential support is a pair of retracement zones at 3863.50 to 3836.75 and 3794.50 to 3757.75.

Daily Swing Chart Technical Forecast

Trader reaction to the resistance cluster at 3922.00 will likely determine the direction of the September E-mini S&P 500 Index into the close on Tuesday.

Bullish Scenario

A sustained move over 3922.00 will indicate the presence of buyers. This could trigger a quick rally into the main top at 3950.00. Taking out this level will reaffirm the uptrend with the Fibonacci level at 3988.75 the next target level. This price is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 3922.00 will signal the presence of sellers. This could trigger a sharp break into the minor retracement zone at 3863.50 to 3836.75.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire