E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – 33004 Trigger for Accelerated Selling

September E-mini Dow Jones Industrial Average futures are down sharply late in the session on Friday after Federal Reserve official James Bullard said inflation was stronger than anticipated and it would take the central bank several meetings to figure out how to pare back stimulus.

The blue-chip Dow was set for its worst day in a month after Bullard, president of the St. Louis Federal Reserve, said he was among the seven officials who saw rate increases beginning next year to contain inflation.

At 19:02 GMT, September E-mini Dow Jones Industrial Average futures are trading 33244, down 449 or -1.33%.

Friday is also “quadruple witching day,” the quarterly simultaneous expiration of U.S. options and futures contracts which bring about increased trading volume at the market close.

It is the largest options expiration in history, noted Randy Frederick, vice president of trading and derivatives for Charles Schwab.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed when sellers took out the main bottom at 33300. The next target is the May 13 main bottom at 33131.

A trade through 34711 will change the main trend to up. This is highly unlikely. However, the Dow is down nine sessions from its last main top. This puts it inside the window of time for a closing price reversal bottom. This may be the only chart pattern that stops the market from accelerating to the downside.

The main range is 31842 to 34883. The Dow is currently testing its retracement zone at 33363 to 33004. This zone is controlling the near-term direction of the market.

Daily Swing Chart Technical Forecast

The direction of the September E-mini Dow Jones Industrial Average into the close on Friday will be determined by trader reaction to the main 50% level at 33363.

Bearish Scenario

A sustained move under 33363 will indicate the presence of sellers. The next downside target is the main bottom at 33131, followed by the Fibonacci level at 33004. This price is a potential trigger point for an acceleration to the downside with 31842 the next major downside target.

Bullish Scenario

A sustained move over 33363 will signal the presence of buyers. This could trigger a short-covering rally into the close.