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E-mini Dow Jones Industrial Average (YM) Futures Analysis – February 8, 2016 Forecast

By:
James Hyerczyk

March E-mini Dow Jones Industrial Average futures broke sharply on February 5 amid a massive technology stock sell-off. Traders blamed mixed U.S.

Daily March E-mini Dow Jones Industrial Average

March E-mini Dow Jones Industrial Average futures broke sharply on February 5 amid a massive technology stock sell-off. Traders blamed mixed U.S. employment data which raised concerns the U.S. Federal Reserve may rates this year. The damage to the Dow chart was minimal compared to the March E-mini NASDAQ-100 Index.

Earlier in the week, investors had abandoned the thought that the Fed would have the firepower to pull-off even one rate hike. After the release of Friday’s stronger-than-expected average hourly earnings data, traders now peg the odds of at least one rate hike in 2016 at 50%, and this will probably take place in December.

Daily March E-mini Dow Jones Industrial Average
Daily March E-mini Dow Jones Industrial Average

Technically, the main trend is down according to the daily swing chart. A trade through 16426 will turn the main trend to up and make 15875 a new main bottom.

The main range is 17660 to 15365. Its retracement zone at 16513 to 16783 remains the primary upside target.

The short-term range is 16426 to 15875. Its 50% level is 16151. Traders should treat this level like a pivot. The Dow has been straddling this level for three days so it is being recognized as important.

The intermediate range is 15365 to 16426. Its retracement zone at 15896 to 15770 is the primary downside target. This zone provided support last week when the Dow reached a low at 15875.

Based on Friday’s close at 16131, the direction of the market today will likely be determined by trader reaction to two angles and the pivot. The pivot is 16151. The uptrending angle comes in at 16197 and the downtrending angle at 16106.

Overtaking 16151 will signal the presence of buyers. This could create enough upside momentum to challenge the uptrending angle at 16197 and the downtrending angle at 16266.

Overcoming 16266 will indicate the buying is getting stronger with the next target angle coming in at 16346. This is the last potential resistance angle before the 16426 main top.

Taking out 16426 will turn the main trend to up and could trigger a fast rally into the major 50% level at 16513 and the main top at 16533.

A sustained move under 16151 will signal the presence of sellers. The first target is the downtrending angle at 16106. The daily chart opens up to the downside under this level with the next major targets coming in at 15996 and 15875.

Watch the price action and read the order flow at 16151 today. Trader reaction to this level will tell us if the bulls or the bears are in control.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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