E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Below Average Volume Makes Dow Ripe for Reversal Top

March E-mini Dow Jones Industrial Average futures hit a fresh record high on Friday to end the week on a positive note. The market continued to get a boost from the easing of geopolitical risks with solid economic data adding to its strong performance. Verizon and 3 M both rose more than 1.8% to push the cash market Dow into record levels.

On Friday, March E-mini Dow Jones Industrial Average futures settled at 28482, up 81 or +0.28%.

The holiday-shortened week should wreak havoc on trading volume, creating doubts as to whether the buying and selling is real or not. The major players are likely going to be on the sidelines over the next week and may not even show up until early January. Be careful chasing the Dow in either direction. Thin trading conditions often produce trading traps.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 28526 will signal a resumption of the uptrend. There is no resistance so if a top is forming, it will show up first in a chart pattern.

The best pattern to watch for is the closing price reversal top. A higher-high, lower-close will indicate the selling is greater than the buying at current price levels. If formed and confirmed, this chart pattern could lead to a 2 to 3 day counter-trend break, but not necessarily a change in trend.

The minor range is 27715 to 28526. Its retracement zone at 28121 to 28025 is the first downside target.

The intermediate range is 27297 to 28526. Its retracement zone at 27911 to 27766.

The main range is 26592 to 28526. Its retracement zone at 27559 to 27331 is likely major support.

Daily Swing Chart Technical Forecast

The direction of the March E-mini Dow Jones Industrial Average on Monday is likely to be determined by trader reaction to Friday’s high.

Bullish Scenario

A sustained move over 28526 will indicate the presence of buyers.

Bearish Scenario

The inability to overcome 28526 will signal the presence of sellers. Taking out Friday’s low at 28377 will indicate the selling is getting stronger. If this creates enough downside momentum over the near-term then look for a potential break into the minor retracement zone at 28121 to 28025.

Closing Price Reversal Top

Taking out 28526 then turning lower for the session will put the Dow in a position to form a potentially bearish closing price reversal top. This will likely occur if there is a false breakout to the upside.