E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Holding Above 24890 Will Indicate Strong Buying

The benchmark Dow Jones Industrial Average posted a solid gain on Wednesday, driven higher by a dovish Fed which signaled it would be “patient” with future rate hikes. This greenlit the rally in the stock market with the Dow closing above 25,000 for the first time since December 4. There could be further upside action since futures traders are pricing in no rate hikes this year. The focus for traders will now shift to U.S.-trade talks.

At 04:35 GMT, March E-mini Dow Jones Industrial Average futures are trading 25008, up 40 or +0.16%.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at 21452 during the week-ending December 28.

The main trend will change to up on a trade through 26110. A trade through 21452 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 27015 to 21452. Its retracement zone at 24890 to 24234 is controlling the longer-term direction of the Dow. Closing above this zone will give the market an upside bias.

The Dow is now up five weeks from its last main bottom. Typically, this type of rallies forms a closing price reversal top after a 7 to 10 week rally. So time is indicating there is still room to the upside.

Weekly Technical Forecast

Based on this week’s price action and the current price at 25008, the direction of the March E-mini Dow Jones Industrial Average the rest of the week is likely to be determined by trader reaction to the downtrending Gann angle at 25086.

Bullish Scenario

Taking out 25086 and sustaining the rally will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the next target angle coming in at 25598. We could see a technical bounce on the first test of this angle, but if it fails then look for the rally to possibly extend into the next major downtrending Gann angle at 25927. This is followed by the main top at 26110.

Bearish Scenario

The inability to overcome or sustain a rally over 25086 will signal the presence of sellers. This could trigger a quick pullback into 24890 and a downtrending Gann angle at 24839.

Crossing to the weak side of the downtrending Gann angle at 24839 will indicate the selling is getting stronger with the next major downside targets coming in at 24234 and 24012.

For bullish traders, essentially, we’d like to see the March E-mini Dow Jones Industrial Average futures contract sustain a rally on the bullish side of the main retracement zone at 24890 to 24234.