E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Big Decision on Test of 27414 to 27027

December E-mini Dow Jones Industrial Average futures are testing their low of the session late in the day on Thursday. After yesterday’s promising reversal to the upside, the follow-through rally just failed to materialize today. Buyers held up the market as long as they could before throwing in the towel, leading to the late session sell-off.

At 19:36 GMT, December E-mini Dow Jones Industrial Average futures are trading 27391, down 460, or -1.65%.

Uncertainty is driving the price action. Uncertainty over the speed of the economic recovery. Uncertainty over the duration of the COVID-19 pandemic and uncertainty over the presidential election. Furthermore, investors are sure why stocks just suddenly stopped going up late last week although traders blamed it on overvalued equities. Additionally, investors aren’t sure why the market went up on Wednesday and whether the tech rout is over.

So I guess it’s safe to say that investors are basically showing us by their actions, “when in doubt, get out.”

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It’s basically been trending lower since momentum shifted on September 3 with the formation of a closing price reversal top.

On Wednesday, the Dow posted a minor reversal bottom. We’re calling it “minor” because time wasn’t a factor. Sure it was a steep sell-off in price, but it was only down three sessions from the top. Most of the best closing price reversal bottoms occur following a 7 to 10 day break.

We did respect the reversal because after all, technical analysis isn’t perfect, but we weren’t actually surprised when the market failed to follow-through to the upside.

A trade through 27068 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 25777 to 29050. Its retracement zone at 27414 to 27027 is the major support. This zone stopped the selling on Wednesday at 27068 and today at 27313.

The short-term range is 29050 to 27068. Its retracement zone at 28059 to 28293 is resistance. Thursday’s high was 28033, just short of the 50% level at 29050.

Short-Term Outlook

Thursday’s price action said it all. With the main trend down, traders are willing to sell rallies into the short-term retracement zone at 28059 to 28293. They are trying to form a potentially bearish secondary lower top.

At the same time, long-term bullish traders are looking for value and they may have found it at 27414 to 27027. Furthermore, they may know that if 27027 fails as support, the Dow could accelerate to the downside with the next major target the July 30 main bottom at 25777.

Looking at it another way, the Dow could become rangebound over the near-term if it continues to trade between 27027 and 28293.

A bullish tone could develop on a sustained move over 28293, while a bearish bias is likely to develop on a sustained move under 27027.