E-mini Dow Jones Industrial Average (YM) Futures Analysis – October 22, 2014 Forecast

The December E-mini Dow Jones Industrial Average futures contract soared on Tuesday, stopping a little over a major 50% level and at a major downtrending angle from the contract high. A breakout over this area could trigger another surge into a major 61.8% level. This is also a potential resistance level or another breakout level.

The main range is 17279 to 15769. The retracement zone formed by this range at 16524 to 16702 is currently being tested.

The downtrending angle from the 17279 contract high comes in at 16543. This angle forms a loose resistance cluster with the 50% level at 16524. Trader reaction to this zone will likely set the tone for the day.

A breakout over 16543 could create enough upside momentum to challenge the Fibonacci level at 16702. If the buying continues then 16911 becomes the next target.

A failure to hold the 50% level at 16524 will be the first sign of weakness. The daily chart indicates there is plenty of room to break into a steep uptrending angle at 16409 and another 50% level at 16359.

The daily chart opens up under 16359, making the major 50% level at 16182 the next major downside target.

Tuesday’s move was exciting, but all the Dow did was complete a 50% retracement of the break from 17279 to 15769. The main trend will remain down until 16949 is taken out.

The tone of the market today is likely to be determined by trader reaction to the downtrending angle at 16543.