E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Big Decision for Bullish Investors at 26410 to 26289

September E-mini Dow Jones Industrial Average futures are trading flat on Wednesday after a steep sell-off the previous session was fueled by somewhat hawkish comments from Federal Reserve Chairman Jerome Powell Tuesday afternoon.

In a speech, Powell downplayed chances of a rate cut and argued that any decision will be based on a broad scope of information. Powell didn’t really waiver from his comments last week after the Fed released its monetary policy. On that day, Powell and his policymakers never said there would be a rate cut. It was the market that had priced in a 100% chance of a rate cut at the July meeting. Now traders have to make adjustments because Powell created uncertainty.

At 07:52 GMT, September E-mini Dow Jones Industrial Average futures are trading 26562, unchanged.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at 26922 on June 21.

As I’ve written numerous times, this chart pattern does not change the trend to down. It only indicates the selling is greater than the buying at current price levels. It often leads to a 2 to 3 day correction or a 50% to 61.8% retracement of the last rally. Today is the third day down, let’s see if sellers go for the retracement.

A trade through 26922 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 25897 will change the main trend to down.

The short-term range is 25897 to 26922. Its retracement zone at 26410 to 26289 is the primary downside target. Since the main trend is up, buyers could return on a test of this zone.

The main range is 24626 to 26922. If the trend changes to down then its retracement zone at 25774 to 25503 will become the downside target.

Daily Swing Chart Technical Forecast

Bearish Scenario

If the downside momentum continues the look for the selling to extend into the short-term 50% level at 26410. Look for a technical bounce. If the level fails as support then look for a further decline into the short-term Fibonacci level at 26289. Once again, look for buyers.

The Fib level at 26289 is the trigger point for an acceleration to the downside with the next major targets 25897 and 25774.

Bullish Scenario

If buyers return then look for a rally into around 26716. It’s an estimate right now because we don’t know what the short-term low will be.

We do know that this retracement of the first leg down is very important because aggressive counter-trend sellers are likely to show up in an effort to form a secondary lower top. If successful, the selling could resume. If buyers can take out the short-term retracement zone then look for a potential retest of 26827 and 26922.