E-mini Dow Jones Industrial Average (YM) Futures Analysis – October 30, 2014 Forecast

December E-mini Dow Jones Industrial Average futures closed slightly lower on Wednesday after posting a high at 16992. Technically, this was a potentially bearish higher-high, lower-close, but not as weak as it would’ve been had the close been below the opening and below the mid-point for the session. Nonetheless, the chart formation is enough to give the market an early downside bias.

On the upside, a trade through 16992 will negate the chart pattern. This could trigger a rally into the nearest downtrending angle at 17047, followed by another angle at 17163. This is the last angle before the contract high at 17279.

On the downside, taking out the downtrending angle at 16815 will put the Dow in an extremely weak position. The daily chart indicates there is plenty of room to the downside.

The first potential downside target is an uptrending angle from the 15769 bottom at 16473. If the new short-term range is 15769 to 16992 then its retracement zone at 16381 to 16236 becomes the primary target.  

Fundamentally, in its statement, Fed policymakers implied the central bank was moving toward a tighter monetary policy more quickly than its peers at the Bank of England and the European Central Bank.

The Fed also announced the end to its monthly bond-buying at the end of this month. In addition, it said in its statement that interest rates could rise sooner or later, depending on how the economy performs. The central bank also dropped the word “significant” in describing underutilization of the labor market. This serves as a sign that it has turned more upbeat on the jobs market.

The tone of the market today will be determined by trader reaction to 16815. The Dow may hover around this level throughout the session before traders finally decide what they want to do.