E-mini Dow Jones Industrial Average (YM) Futures Analysis – Rally Over 24586 Could Drive Market into Major 50% Level at 24925

September E-mini Dow Jones Industrial Average futures closed higher last week while posting an inside move on the weekly chart. The chart pattern suggests investor indecision and impending volatility.

The E-mini Dow settled at 24456, up 191 or 0.79%

Volume was light last week because of the U.S. holiday so we have to take the strength with a grain of salt. We should know for sure if the up move was real when the major investment banks and money managers come back this week. They are going to have to decide whether to chase the market or wait for a pullback into support.

Weekly Technical Analysis

The main trend is up according to the weekly chart. However, momentum is trending lower. If you look at the weekly chart, you will see that the market is sitting inside the five-month range formed by the late January top and the early February bottom.

The minor trend is down. A trade through 25418 will change the minor trend to up. A move through this price will also take out the closing price reversal top that is contributing to the downside momentum.

The main range is 26672 to 23178. Its retracement zone at 24925 to 25337 is not only resistance, it is controlling the longer-term direction of the Dow e-mini futures contract.

Weekly Technical Forecast

Based on last week’s price action and the close at 24456, the direction of the September E-mini Dow Jones Industrial Average futures contract is likely to be determined by trader reaction to the uptrending Gann angle at 24586.

A sustained move over 24586 will indicate the presence of sellers. If this move generates enough downside momentum, we could see a test of the next uptrending Gann angle at 23882. This angle provided support during the week-ending May 4 at 23500 and the week-ending April 6 at 23355.

If sellers can take out the angle at 24586 then look for the selling to extend into the next uptrending Gann angle at 23530. This is the last major support angle before the 23178 main bottom.

A sustained move under 24586 will signal the presence of buyers. If the buying is strong enough then look for an acceleration to the upside with the first target the 50% level at 24925. This is followed by a downtrending Gann angle at 25200 and a Fibonacci level at 25337. Since the trend is down, sellers are likely to show up on a test of 24925 to 25337.

Basically, we are going to treat the uptrending Gann angle at 24586 like a pivot all week. We will be monitoring the order flow at this level to determine if the buyers or sellers are in control.