E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – 26012 to 25685 Retracement Zone Controlling Near-Term Direction

September E-mini Dow Jones Industrial Average futures are trading higher at the mid-session, helped by a surge in the energy sector, which dampened fears of a near-term recession. Energy shares rose sharply after the U.S. Energy Information Administration (EIA) reported a much larger than expected weekly drawdown. The news offset some of the bearishness created by an earlier inversion of the 2-year/10-year U.S. Treasury yield curve, a signal that is often used to predict recessions.

At 15:33 GMT, September E-mini Dow Jones Industrial Average futures are trading 25950, up 206 or +0.78%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 26375 will change the main trend top up. A move through 25266 will signal a resumption of the downtrend.

The minor trend is also down. A trade through 26069 will change the minor trend to up. This will also shift momentum to the upside.

The main range is 24626 to 27397. Its retracement zone at 26012 to 25685 is controlling the near-term direction of the futures contract. The Dow is currently trading inside this zone.

The short-term range is 27397 to 24626. Its retracement zone at 26215 to 26494 is the next upside target. It’s also resistance. It stopped the rally on August 22 at 26375 and on August 13 at 26408. Overtaking this zone will put the Dow in a bullish position.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 25950, the direction of the September E-mini Dow Jones Industrial Average futures contract into the close will be determined by trader reaction to the main 50% level at 26012.

Bullish Scenario

Taking out 26012 and sustaining the rally will indicate the buying is getting stronger. This should trigger a fast move into the minor top at 26069.

A move through 26069 will change the minor trend to up. This could trigger a rally into the short-term 50% level at 26215. Overtaking this level could lead to a surge into the main top at 26375, followed by a main top at 26408 and the short-term Fibonacci level at 26494.

Bearish Scenario

The inability to overcome 26012 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the main Fibonacci level at 25685. Taking out the intraday low at 25620 could trigger an acceleration to the downside.