Chart Context & Key Developments
In the previous analysis, we noted that ES was making a strong recovery from March’s lows, but faced resistance just below the 100-day SMA and the pivot point at 5,992.50. We highlighted that a break above that region would be critical for bulls, while failure there would likely confirm the broader downtrend that’s been developing post-ATH.
Today’s chart shows exactly that: ES was rejected hard from the pivot/SMA cluster and is now back under significant pressure, closing at 5,576, down 0.83% on the day. Price has now cleanly broken below the March 27 and March 28 lows, confirming a short-term lower high and lower low structure.
What Has Changed?
- SMA Confluence Rejected: Both the 50 and 100 SMA were tested and firmly rejected. This confirms them now as dynamic resistance.
- Failed Follow-Through from Rebound: Despite 4 days of bullish candles from the 5,500 support area, bears regained full control. This invalidates the recovery thesis unless a new base forms soon.
- Momentum Shifting Again: The RSI is back under 50, currently sitting around 43, hinting that sellers are taking control of momentum again.
Drivers Behind the Move
- Rising Global Yields: Treasury yields surged in the second half of last week as inflation expectations increased again. This weakens equities, particularly growth-heavy indexes like the S&P 500.
- Cautious Fed Rhetoric: Recent comments from FOMC officials have leaned hawkish, with more members suggesting that rate cuts may be delayed further into the year.
- Dollar Rebound: The DXY stabilized after its drop, removing some of the tailwind equities had from the weakening USD.
Scenarios Moving Forward
Bear Case:
- Price has now formed a confirmed lower high below both SMAs and is testing the previous low at 5,527.
- A break below the 5,500–5,520 zone opens up a quick drop toward 5,400–5,375, the next logical support from February consolidation levels.
- If macro weakness continues (e.g., sticky inflation or earnings misses), downside acceleration could take ES toward 5,250–5,200, where stronger buying interest may return.
Bull Case:
- If ES can reclaim 5,620–5,640 early next week and close back above it, it might be setting a bear trap with a higher low.
- Reclaiming the SMAs near 5,950 remains critical for any larger bull case to resume but a bounce from 5,550 would be enough to give bulls some hope.
Trade Ideas
Bearish Trade:
- Setup: Short on any relief bounce to 5,640–5,660 with tight stops above 5,700.
- Target: 5,500 → 5,420
- Risk: Low – invalidation is tight with defined resistance zone.
Aggressive Breakout Trade (if support breaks):
- Trigger: Break below 5,500 with momentum.
- Entry: Market or pullback entry near 5,490.
- Target: 5,400 → 5,375
- Stop: Above 5,540.
Neutral Scenario (no trade):
- If price consolidates sideways in a tight range between 5,540–5,600 with low volume, consider standing aside until a clear breakout/breakdown.
