E-mini Dow Jones Industrial Average (YM) Futures Analysis – October 26, 2016 Forecast

December E-mini Dow Jones Industrial Average futures are trading lower shortly before the cash market opening. The overnight sell-off is a reaction to yesterday’s bearish earnings report from Apple. A steep break in crude oil futures helped the Dow close lower on Tuesday. The selling pressure could resume today if the U.S. Energy Information Administration’s weekly inventory report comes out weaker than expected.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through 18320 will turn the main trend to up. The price action suggests that a new secondary lower top may be forming at 18197. Momentum may be shifting to the downside. A trade through 17868 will signal a resumption of the downtrend.

The main range is 18468 to 17822. Its 50% level or pivot at 18145 is controlling the longer-term direction of the market. A sustained move under this level will indicate the selling is greater than the buying.

The short-term range is 17868 to 18197. Its 50% level or pivot at 18033 is controlling the short-term direction of the market. This level is currently being tested. It should be watched closely because buyers are going to try to form a secondary higher bottom at this price and sellers are going to try to take it out in an effort to make 18197 a new secondary lower top.

Forecast

Based on the current price at 18037 and the early price action, the direction of the Dow today is likely to be determined by trader reaction to the short-term pivot at 18033.

Holding 18033 and sustaining the move could create enough upside momentum to trigger a rally into a downtrending angle at 18128. Breaking through this level could trigger the start of a labored rally with a series of potential targets. The first two come in at 18128 and 18156. These are followed by a pair of downtrending angles at 18196 and 18224.

A sustained move under 18033 will indicate the selling pressure is getting stronger. Taking out the uptrending angle could trigger an acceleration to the downside with the next target angles coming in at 17940 and 17904. The latter is the last potential support angle before the 17868 main bottom.

Watch the price action and read the order flow at 18033 today. Trader reaction to this short-term pivot will tell us if buyers are coming in on this dip, or if sellers are increasing their pressure.