E-mini Dow Jones Industrial Average (YM) Futures Analysis – October 7, 2014 Forecast

December E-mini Dow Jones Industrial Average futures rallied into a key Fibonacci level on Monday, encouraging profit-taking and fresh shorting while leading to a lower close. The close near the low could lead to further downside pressure early in today’s session.

The main range is 17279 to 16589. The retracement zone formed by this range is 16934 to 17016. Monday’s rally into 17020 was a successful test of the upper, or Fibonacci level. The close below the lower, or 50% level gives the market an early downside bias today. This zone remains resistance today.

Another sign of weakness will be a break under the downtrending angle at 16895.

If a short-term rally forms between 16589 and 17020 then look for a pull-back into the minor retracement zone at 16805 to 16754. The next two uptrending angles at 16781 and 16685 are also potential support levels.

The major support is the longer-term retracement zone at 16711 to 16577.

On the upside, holding above the angle at 16895 could trigger a fast rally into the 50% level at 16934. A sustained move over this angle could create enough upside momentum to challenge the Fibonacci/Minor Top formation at 17016 to 17020. Taking out this area will be bullish and could fuel a rally into 17087.

The tone of the market is likely to be determined by trader reaction to 16895.

How traders react to this price will either lead to a rally into 16934 to 17016, or a break into 16805 to 16754.