E-mini Dow Jones Industrial Average (YM) Futures Analysis – Nearing Cluster of Potential Support Levels at 21283 to 21011

March E-mini Dow Jones Industrial Average futures are trading lower early Wednesday amid concerns over the government shutdown and worries about liquidity issues following a phone call by Treasury Secretary Mnuchin to a number of major banks on Sunday. Although the worries may be over nothing, investors would like to know why the phone call was made in the first place.

At 0527 GMT, March E-mini Dow Jones Industrial Average futures are trading 21562, down 138 or -0.65%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was confirmed earlier in the session. Although the market is in no position to change the main trend to up, today’s session begins with the Dow in the window of time for a potentially bullish closing price reversal bottom.

A closing price reversal bottom won’t change the trend to up, but it will indicate the buying is greater than the selling at current price levels. This could lead to the start of a 2 to 3 day counter-trend rally.

Daily Retracement Levels Technical Analysis

The major long-term range for the nearby futures contract is 17320 to 26981. The Dow is currently trading inside its 50% to 61.8% retracement zone at 22151 to 21011. This is also known as the President Trump Election Rally Retracement since the bottom was put in the night of his election on November 9, 2016.

Daily Swing Chart Technical Forecast

With the market currently inside the window of time for a closing price reversal bottom, the direction of the March E-mini Dow Jones Industrial Average on Wednesday is likely to be determined by trader reaction to Monday’s close at 21700.

Bullish Scenario

Given today’s lower-low, recovering and sustaining a move over Monday’s close at 21700 will put the futures contract in a position to form a potentially bullish closing price reversal bottom. Following the intraday move, we’re likely to see a strong short-covering rally.

Finishing the session higher will form the closing price reversal bottom. If confirmed on Thursday, this could fuel the start of a 2 to 3 day counter-trend rally.

Bearish Scenario

A sustained move under 21700 will signal the presence of sellers. If the downside pressure continues then look for a test of a series of main bottoms including the July 11, 2017 main bottom at 21283, the June 29, 2017 main bottom at 21195 and the June 7, 2017 main bottom at 21119..

This cluster of bottoms is followed by the major Fibonacci level at 21011. Look for a technical bounce on the first test of this level, but if it fails then look for an acceleration to the downside with the next targets the May 18, 2017 main bottom at 20485 and the April 19, 2017 main bottom at 20322.

The main bottom at 20322 is the trigger point for an acceleration into the January 31, 2017 main bottom at 19679 and the January 19, 2017 main bottom at 19573.