E-mini Dow Jones Industrial Average (YM) Futures Analysis – October 20, 2016 Forecast

December E-mini Dow Jones Industrial Average futures reversed its earlier gains and is now called lower shortly before the cash market opening. The market is weakening due to disappointing news from the European Central Bank.

With the ECB out of the way, investors are likely to continue to monitor corporate earnings, Treasury yields and crude oil prices. Stellar earnings have been helping to underpin the Dow. Falling Treasury yields have also been supportive. This is in reaction to lower expectations for a Fed rate hike in December. Higher oil price are likely to be supportive because they will help lift energy sector stocks.

Technical Analysis

The main trend is down according to the daily swing chart. The trend will turn up on a trade through 18320. A move through 17868 will signal a resumption of the downtrend.

The short-term range is 17868 to 18178. Its 50% level or pivot is the primary downside target.

The main range is 18468 to 17822. Its 50% level or pivot is 18145. This price is controlling the longer-term direction of the Dow. The market is straddling this price today, however, it is currently below it, giving the market a downside bias.

Forecast

Based on the current price at 18108 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the 50% level at 18145.

A sustained move under 18145 will indicate the presence of sellers. This could drive the Dow into a cluster of numbers at 18064, 18046, 18028 and 18023. We could see a technical bounce, following a test of this area.

If 18023 fails as support then we could see a steep decline into the next angle at 17948, followed closely by 17934.

A sustained move over 18145 could generate enough upside momentum to challenge a downtrending angle at 18192. This is followed by a pair of downtrending angles at 18228 and 18256.

Watch the price action and read the order flow at 18145 today. Trader reaction to this level will tell us if the bulls or the bears are in control.