E-mini Dow Jones Industrial Average (YM) Futures Analysis – October 15, 2014 Forecast

December E-mini Dow Jones Industrial Average futures posted a lower-low, higher-close on Tuesday indicating that a short-term bottom may be forming. The market traded down to 16195 which was slightly better than the August 8 spike bottom at 16143.

If buyers came in to defend this low then look for a follow-through move to the upside today to confirm the reversal bottom. A trade through 16385 will confirm the short-term bottom and coincidentally put the Dow on the strong side of a major Fibonacci level at 16381.

A sustained move over 16381 will indicate the buying is getting stronger. The buying pressure may be coming from value-seekers entering new positions at favorable price levels, or shorts taking profits following the prolonged move down in price and time.

If buyers don’t come in to support the market and confirm yesterday’s reversal bottom then look for another round of selling pressure to begin. Taking out 16195 will negate the reversal bottom, but taking out 16143 will reaffirm the downtrend. This could lead to a test of the long-term uptrending angle from the 15825 bottom at 16085.

The angle at 16085 is the last major support before the April 11 bottom at 15825.

The tone of the market today will be determined by trader reaction to the Fibonacci level at 16381. Keep in mind that the index is in the window of time for a bottom so be careful selling weakness under 16195 or 16143. Don’t get caught in a bear trap. It could be painful.