E-mini Dow Jones Industrial Average (YM) Futures Analysis – Trade Through 23372 Confirms Weekly Closing Price Reversal Bottom

March E-mini Dow Jones Industrial Average futures finished higher last week following one of the most volatile weeks in history. On Christmas Eve the Dow posted its worst performance for the day before Christmas on record. Two days later it posted its biggest one-day gain in history.

Some analysts blamed the whip-saw price action on ultra-thin holiday volume. This may be true to some extent, however, don’t expect the volatility to disappear after the New Year holiday. There are still heightened concerns over the partial government shutdown, uncertainty over Fed policy and the ongoing trade dispute between the United States and China.

Last week, March E-mini Dow Jones Industrial Average futures settled at 23035, up 628 or +2.73%.

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. However, momentum may be getting ready to shift to the upside following last week’s dramatic and potentially bullish closing price reversal bottom.

The market is in no position to change the main trend to up. A trade through 2316.75 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The major support is a long-term retracement zone at 22168 to 21023.

The minor range is 26110 to 21452. Its retracement zone at 23781 to 24331 is the first upside target. Since the main trend is down, look for sellers to come in on the first test of this area.

The main range is 27015 to 21452. Its retracement zone at 24234 to 24890 is the second target area.

Combining the two retracement zones creates a resistance cluster at 24234 to 24331. This is probably the best selling area for trend traders.

Weekly Swing Chart Technical Forecast

Based on last week’s closing price reversal bottom and close at 23035, the direction of the March E-mini Dow Jones Industrial Average this week is likely to be determined by trader reaction to last week’s high at  23372.

Bullish Scenario

A sustained move over 23372 will confirm the closing price reversal bottom. If this move is able to generate enough upside momentum then look for a potential rally into the first retracement zone at 23781 to 24331. Since the main trend is down, sellers are likely to come in on a test of this zone.

Look for additional selling pressure on the test of the resistance cluster at 24234 to 24331. If 24331 is taken out with rising volume then look for a spike into 24890.

The trigger point for an acceleration to the upside is 24890. If buyers can take out this level with conviction then look for the rally to possibly extend into a pair of tops at 26110 and 26300.

Bearish Scenario

The inability to overcome or sustain a rally over 23372 will signal the presence of sellers. This could lead to a short-term break into 22412. Aggressive counter-trend buyers could come in on a test of this level, but if it fails then look for a retest of the major 50% level at 22168, followed by last week’s low at 21452.

The downtrend will resume under 21452 with the major Fibonacci level at 21023 the next major target.