E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Inside Range Suggests Impending Volatility

December E-mini Dow Jones Industrial Average futures are edging lower early Wednesday. The market is currently trading inside the previous two ranges, which indicates investor indecision and impending volatility.  The volatility should pick up later in the session with the release of the U.S. Federal Reserve monetary policy statement and interest rate decision.

At 05:21 GMT, December E-mini Dow Jones Industrial Average futures are at 27022, down 20 or -0.07%.

The Fed is largely expected to lower interest rates by 25 basis points. That would be the third time this year the Fed cuts rates. However, investors will also look for clues about the Fed’s policy decisions in the future. A dovish Fed could underpin prices, but it could also send a message that the economy is weaker than previous thought. A hawkish Fed could trigger a steep break. Taking a pause from a rate cut in December could be construed as hawkish by some.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 27120 will signal a resumption of the uptrend. The main trend changes to down on a trade through 26788.

The short-term range is 26588 to 27120. Its 50% level or pivot is 26854. This is the first downside target today. Since the main trend is up, buyers could come in on a test of this pivot. If it fails to hold then look for further weakness with the main bottom at 26588 the next potential downside target.

The main range is 25703 to 27120. If the main trend changes to down then look for a potential test of its retracement zone at 26412 to 26244. This is also a potential value zone.

Daily Swing Chart Technical Forecast

Two days of inside days means traders should watch for volatility today. The top of the range is 27120. The bottom of the range is 26926. These are the potential breakout levels.

Bullish Scenario

Taking out 27120 and sustaining the move could create the upside momentum needed to challenge the three main tops at 27262, 27312 and 27375.

Bearish Scenario

A sustained move under 26926 will signal the presence of sellers. This could lead to a test of the short-term pivot at 26854. More importantly, it will also indicate the Dow has turned lower for the week.

If 26854 fails as support then this will indicate the selling pressure is getting stronger. This could lead to a test of the main bottom at 26588. Taking out this bottom will change the main trend to down.