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James Hyerczyk
E-mini Dow Jones Industrial Average

September E-mini Dow Jones Industrial Average futures are trading over 500 points lower on Monday. The market is currently testing the 50% to 61.8% retracement zone of the early June to mid-July rally. Trader reaction to this zone should help determine the near-term direction of the Dow.

Trader reaction to this zone will also tell us if the pressure is being driven by panic selling or orderly liquidation. Since this zone represents value, renewed buying will suggest that the selling is being fueled by orderly liquidation. If sellers drive right through this area then I think it’s safe to say there are no buyers in there today.

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At 03:52 GMT, September E-mini Dow Jones Industrial Average futures are trading 25880, down 569 or -2.15%.

Daily September E-mini Dow Jones Industrial Average

Daily Technical Analysis

The main trend is down according to the daily swing chart. The earlier trade through 25897 reaffirmed the downtrend, but since this occurred inside a key retracement zone, the follow-through to the downside was limited.

The main range is 24626 to 27397. Its retracement zone at 26011 to 25684 is currently being tested. This zone is controlling the near-term direction of the Dow.

A trade through 25684 could lead to an eventual test of the 24626 main bottom. Due to the prolonged move down in terms of price and time, this retracement zone is a good place to start a closing price reversal bottom.

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Daily Technical Forecast

Based on the early price action and the current price at 25880, the direction of the September E-mini Dow Jones Industrial Average futures contract is likely to be determined by trader reaction to the 50% level at 26011 and the uptrending Gann angle at 26034.

Bearish Scenario

A sustained move under 26011 will indicate the presence of sellers. If this move continues to generate enough downside momentum then look for the selling to possibly extend into the Fibonacci level at 25684.

Taking out 25684 will indicate the selling pressure is getting stronger. Crossing to the weak side of the steep downtrending Gann angle at 25477 could lead to a test of the uptrending Gann angle at 25330.

If this angle fails as support then look for the selling to possibly extend into a pair of uptrending Gann angles at 24978 and 24802. The latter is the last potential support angle before the 24626 main bottom.

Bullish Scenario

Overtaking 26034 and sustaining the move will signal the return of buyers. If successful, this could lead to a test of the downtrending Gann angle at 26437. This is a potential trigger point for an acceleration to the upside.

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