E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Early Reaction to 26298 Sets the Tone

September Dow Jones Industrial Average futures finished lower on Friday, creating a divergence with the other major indexes. The blue chip average was weighed down by weakness in Dow components Microsoft and Boeing, which lost 1.7%, helping to keep the average in negative territory.

The Dow opened higher as investors were hoping for more fiscal support, as a program that offers additional unemployment benefits is set to expire on July 31. The U.S. Congress will return to Washington on Monday to battle over the next coronavirus aid bill.

On Friday, September Dow Jones Industrial Average futures settled at 26520, down 33 or -0.12%.

The Dow was supported most of the week after promising data on a COVID-19 vaccine helped investors look past a record-breaking increase in coronavirus cases in the United States.

Near the end of trading on Friday, the Dow gave up early gains to trade lower as fears over business disruptions due to another record-breaking rise in COVID-19 cases at home overtook optimism over a further stimulus for a post-pandemic economic revival.

Daily Swing Chart Technical Analysis

Main Trend Technical Analysis

The main trend is up according to the daily swing chart. A trade through 27063 will signal a resumption of the uptrend with the June 9 main top at 27466 the next upside target.

The main trend will change to down on a trade through the main bottom at 25293. If this move creates enough downside momentum then look for the selling to possibly extend into the May 14 main bottom at 22640.

Minor Trend Technical Analysis

The minor trend is also up. This is controlling the near-term momentum. A trade through 25293 will change the minor trend to down. This will shift momentum to the downside. The minor uptrend will be reaffirmed on a trade through 27063.

Retracement Level Analysis

The short-term range is 27466 to 24409. Its retracement zone at 26298 to 25938 is support. It is controlling the near-term direction of the Dow.

The main range is 26640 to 27466. If the main trend changes to down then look for a test of its retracement zone at 24484. This zone is controlling the longer-term direction of the Dow.

Short-Term Outlook

The price action late in the week suggests investors are shying away from buying strength and may try to drive the Dow into a value area.

The first target is the short-term Fibonacci level at 26298. Breaking through this level, but holding above the 50% level at 25938 will indicate a neutral tone. The Dow could start to weaken considerably if 25938 fails as support.

The first trigger point for an acceleration to the downside is 25874. If this creates enough downside momentum then look for the selling to possibly extend into 25293 to 25053.