E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – China COVID Restrictions Limit Gains

September E-mini Dow Jones Industrial Average futures are trading slightly better late in the session on Monday in a lackluster trade ahead of Wednesday’s government report on consumer inflation, and the unofficial start to earnings season on Tuesday and Wednesday. Gains are also being capped by renewed concerns of a global economic slowdown after China announced new COVID-19 restrictions in Macau.

At 17:55 GMT, September E-mini Dow Jones Industrial Average futures are at 31328, up 18 or +0.06%. The SPDR Dow Jones Industrial Average ETF (DIA) is trading $311.75, down $1.71 or -0.55%.

Investors are looking ahead to key inflation data this week. The June consumer price index (CPI) will be released on Wednesday at 12:30 GMT and is expected to show headline inflation, including food and energy, rising above May’s 8.6% level.

In other news, JP Morgan Chase reports earning on Thursday, followed by UnitedHealth on Friday.

Short-Term Outlook

Trader reaction to the minor 50% level at 31099 is likely to determine the direction of the September E-mini Dow into the close on Monday.

Bullish Scenario

A sustained move over 31099 will indicate the presence of buyers. This could trigger a late session surge into a short-term 50% level at 31447, followed by a minor top at 31490.

Taking out 31490 will reaffirm the upside momentum. This could help extend the rally into the main top at 31867 and a short-term Fibonacci level at 31874. Taking out these levels will change the main trend to up.

Bearish Scenario

A sustained move under 31099 will signal the presence of sellers. This could trigger an acceleration into another short-term retracement zone at 30753 to 30490. This is the last potential support before the 30331 main bottom. Taking out this level will reaffirm the downtrend.