E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Attempting Weak Comeback

March E-mini Dow Jones Industrial Average futures are coming back with a vengeance Thursday afternoon after the Federal Reserve announced extraordinary funding actions to ease strained capital markets in the wake of the coronavirus sell-off. The Fed announced it will ramp up its overnight funding operations to more than $500 billion.

At 17:36 GMT, March E-mini Dow Jones Industrial Average futures are trading 21934, down 1641 or -6.96%.

Daily Technical Analysis

The trend is down. It won’t change to up unless buyers can take out 27075.

“Think long, think wrong” unless the market can close higher today and post a potentially bullish closing price reversal bottom.

The big question is “how long will the Fed bounce last?’ What happens when they take it back?

Earlier today, the Dow futures contract dipped below the 2019 March E-mini Dow low from December 24, 2018 at 21452.

Longer-Term Look

There are two ranges we are focusing on.

The first is the Trump low at 17200 to the Trump high at 29543. Its 50% to 61.8% retracement zone at 21915 to 23372 is currently being tested. This means that the market has already erased 62% of the entire Trump rally.

The second range is the March 2009 bottom at 4075 to the February 2020 top at 29543. Its retracement zone at 16809 to 13804 is another major downside target.

Snap-Back Rally

At some point, we expect to see a huge retracement of the first leg down. This is often 50% to 61.8% of this break. We can’t calculate it until we reach a bottom. Right now, it’s about 25313. Since the trend is down, sellers are likely to return on a test of this level.

Momentum is King

Keep it simple. Momentum is controlling the price action. Use momentum to get it, use it to get out. Don’t switch entry and exit methods. If it stops doing what you want it to do, just get out.

Don’t use oscillators, they don’t work. There is no such thing as oversold. RSI and stochastics are coincidental indicators. You only find out its “oversold” after it already turns. Besides, when there are millions of shares of outstanding stock, how can it be oversold? Investors can keep selling and selling until they run out of shares to sell. Trust me on that one.

Stick with the 50% and 61.8% lines. They are on everyone’s charts, some see them, some don’t. Not everyone uses the same moving averages. Some curve fit them to fit the market. Although I have confidence in the 200-day moving average.