E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Confirmed Bearish Reversal Top Overnight
March E-mini Dow Jones Industrial Average futures are trading flat Thursday’s premarket session after the Blue Chip Average confirmed yesterday’s potentially bearish closing price reversal top.
The selling pressure is being fueled by fear of higher interest rates after the minutes from the Federal Reserve’s December meeting revealed the central bank discussed reducing its balance sheet Wednesday afternoon in another move to aggressively dial back its pandemic-era easy monetary policy.
At 09:01 GMT, March E-mini Dow Jones Industrial Average futures are at 36335, up 44 or +0.12%.
The Fed’s plan to reduce the number of Treasurys and mortgage-backed securities it holds comes as it is already tapering its bond purchases and is set to hike interest rates after the taper concludes.
What it all means is that investors will be making adjustments to their portfolios to account for the transitioning from extremely easy monetary policy and fiscal policy to less easy monetary and less expansive fiscal policy.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, but momentum has shifted to the downside with the confirmation of Wednesday’s closing price reversal top.
A trade through 36120 will change the main trend to down. A move through 36832 will negate the closing price reversal top and signal a resumption of the uptrend.
The minor range is 36120 to 36832. The E-mini Dow is currently trading on the weak side of its pivot at 36476, making this level resistance.
The short-term range is 34547 to 36832. If the main trend changes to down then its pivot at 35690 will become the first downside target.
This is followed by the intermediate support at 35346 and the main support zone at 35066 to 34649. The latter is very important support because it is controlling the near-term direction of the E-mini Dow.
Daily Swing Chart Technical Forecast
The direction of the March E-mini Dow on Thursday is likely to be determined by trader reaction to the pivot at 36476.
A sustained move under 36476 will indicate the presence of sellers. The first downside target is the main bottom at 36120. Taking out this level will change the main trend to down. If it leads to increased selling momentum then look for the move to extend into 35690.
We could see a technical bounce on the first test of 35690, but if it fails then look for the selling pressure to increase with the next key target level coming in at 35346. This is the last potential support before the major support zone at 35066 to 34649.
A sustained move over 36476 will signal the presence of buyers. If this move generates enough upside momentum then look for a test of 36832. This is a potential trigger point for an acceleration to the upside.