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James Hyerczyk
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June E-mini Dow Jones Industrial Average futures tumbled at the start of trading on Monday after Congress failed to agree on a fiscal stimulus plan. A surge in the global death toll from the coronavirus also contributed to the early session weakness. Earlier in the session, the blue chip Dow Jones Industrial Average hit their “limit down”, falling 5%.

At 02:45 GMT, June E-mini Dow Jones Industrial Average futures are trading 18176, down 864 or -4.54%.

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On Saturday, National Economic Council Director Larry Kudlow said an economic stimulus package will total more than $2 trillion, noting it will be equal to roughly 10% of U.S. economic output. Treasury Secretary Steven Mnuchin said Sunday that financing programs to stimulate the economy could be worth $4 trillion, noting these efforts will include coordination with the Federal Reserve to provide businesses with necessary liquidity.

However, both plans failed a key procedural Senate vote Sunday as Democrats warned the measure did not do enough to help workers and too much to bail out companies.

Daily June E-mini Dow Jones Industrial Average

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed when sellers took out last week’s low at 18766. There is no chance at a change in trend, but we have to be prepared for a closing price reversal bottom.

The minor trend is also down. A trade through 20882 will change the minor trend to up. This will also shift momentum to the upside.

There is also gap resistance on the weekly chart at 18507 to 18766 and on the daily chart at 18507 to 18825.

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Daily Technical Forecast

Look for the downside momentum to continue as long as the 18507 to 18825 resistance gap remains intact. The first downside target is a previous main bottom at 17297.

Filling in the gap will indicate the presence of buyers. The next target is Friday’s close at 19040.

Overtaking 19040 will put the Dow in a position to form a potentially bullish closing price reversal bottom. This won’t change the trend to up, but it could lead to a 2 to 3 day counter-trend rally.

Another upside target is a steep downtrending Gann angle at 19794. A sustained move over this angle could generate the upside momentum needed to challenge Friday’s minor top at 20882.

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