ES Futures Update: The Key Line I’m Watching This Week

After the first Fed rate hike in three years, E-mini S&P 500 futures (ES) have been consolidating. And with important economic data coming this week, there’s one line on the daily chart I think is especially helpful to watch.

Mapping the Fed Alongside ES Futures

First, we have a couple of important pieces of economic data this week, including PCE data and the non-farm payroll report. This is an especially interesting time because we just had the first Fed rate hike in three years.

On this daily chart, I’ve marked the beginning of Kevin Warsh’s tenure at the Fed with the blue vertical line on May 22nd. The yellow vertical lines mark Fed meeting announcements.

There were two meetings over the summer where rates were left unchanged, although we did get hawkish commentary. Then came the September 16th rate hike.

This is what I call fundamental mapping of the chart. I’m taking major fundamental events that can affect the market and plotting them right alongside price action.

Right now, yields and stocks have also been fairly closely tied. When yields move higher, stocks have tended to consolidate or move lower.

I dig further into mapping a market in the first series of lessons inside my newly updated Gann Trading Patterns System.

Where S&P 500 Futures Are Consolidating Now

Coming back to ES, here’s what I find intriguing. ES futures have been hanging out above the 50% retracement of the move from the September 16th low to the September 22nd high.

It isn’t the only swing on this chart, but it is the most recent upswing, which makes that retracement an important support level to watch. Overall, ES has also been consolidating above the September 21st low for the most part, briefly testing below it on September 24th.

All of that, together with the recent Fed action, suggests to me that the upper boundary of this consolidation is worth watching.

The ES Futures Line I’m Watching

I would draw that boundary from the September 22nd high through the September 25th lower high. You can see the black line on the chart above.

I don’t have a lower boundary drawn in this case. Sometimes a consolidation has useful boundaries on both ends, and sometimes it doesn’t.

I provide my take on ES futures in more detail inside my ES Futures Outlook service. But what I want to share with everyone here is this: I’d watch that descending line and look for a daily closing break above it before getting excited about the next potential bullish move.

Remember, we still have the Iran war going on. Oil prices could pick up again depending on how that conflict evolves, and we still have the effects of rising rates to follow.

So keep an eye on that ES boundary, especially around the PCE data and any Fed commentary that may come up.

📅 PS — First 40 Trading Club Office Hours Tomorrow!

If you’re a First 40 Trading Club member, I’ll be holding Office Hours tomorrow:

Wednesday, September 30th at 4:30 PM ET

Check out all upcoming events at himareddy.com/events

And since we’re talking ES today, I’m curious:

What’s one market, ticker, or level you’re watching closely this week?

Comment below and let me know.