E-mini Dow Jones Industrial Average (YM) Futures Analysis – Pivot Price at 21856 Controlling Market’s Direction This Week

After a gap-lower opening last Tuesday due to concerns over another nuclear weapons test by North Korea over the week-end, the September E-mini Dow Jones Industrial Average futures market moved sideways to lower for three days before settling the week with a loss.

Other factors contributing to the weakness were concerns over tax reform, fear that the situation in the Korean Peninsula would escalate and worries about a weaker economy over the near-term due to the impact of Hurricane Harvey on the Texas Gulf Coast. Insurance stocks contributed the most to the losses as investors dumped shares in anticipation of further damage from Hurricane Irma which is expected to hit Florida this week-end.

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. A trade through 22132 will signal a resumption of the uptrend. A move through 21579 will change the minor trend to down.

The short-term range is 22132 to 21579. Its 50% level or pivot is 21856. The Dow straddled this price last week.

The intermediate range is 21138 to 22132. Its retracement zone at 21635 to 21518 is the next downside target zone. It stopped the selling two weeks ago at 21579.

The main range is 20274 to 22132. Its retracement zone at 21203 to 20984 is the primary downside target. Since the trend is up, we’re likely to see buyers show up on a test of this zone.

Weekly Forecast

Based on last week’s close at 21812, the direction of the Dow this week will likely be determined by trader reaction to the short-term pivot at 21856.

A sustained move over 21856 will signal the presence of buyers. This is followed by a pair of downtrending angles at 21972 and 21812. The latter is the last potential resistance angle before the 22132 contract high.

A sustained move under 21856 will indicate the presence of sellers. Crossing to the weak side of a pair of Gann angles at 21842 and 21812 will signal that the selling is getting stronger. This could trigger an acceleration into the 50% level at 21635, a long-term uptrending angle at 21618, a minor bottom at 21579 and the Fibonacci level at 21518.

Look for the start of a steep break if 21518 is taken out with conviction. If this occurs then we could see a move into 21203.