E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Line in the Sand for Traders is 26494

Based on the early price action and Thursday’s close at 26225, the direction of the September E-mini Dow Jones Industrial Average on Friday is likely to be determined by trader reaction to the short-term 50% level at 26215.
James Hyerczyk
E-mini Dow Jones Industrial Average

September E-mini Dow Jones Industrial Average futures are trading higher early Friday as traders await Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole. The speech is scheduled for 14:00 GMT, but you have to start watching earlier than that just in case a transcript of his speech is released early.

At 05:25 GMT, September E-mini Dow Jones Industrial Average futures are trading 26303, up 78 or +0.30%.

Powell has to come across with clarity and conviction. Should he continue with the Fed’s “mid-cycle adjustment” narrative, the Dow could plunge. Bullish traders are hoping he hints at as many as four rate cuts over the next 12 months. The market is expecting a 25-basis point cut in September with a small crowd looking for 50-basis points.

Daily September E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. It was a subtle move on Wednesday that changed the trend. A trade through 25872 will change the main trend to down.

The low volume this week has been dangerous this week to buy strength and sell weakness. Nonetheless, it’s the only way to trade the market on Friday since Powell’s speech if likely to trigger a huge breakout to the upside, or a tremendous sell-off.

The short-term range is 27397 to 25032. Its retracement zone at 26215 to 26494 is still acting like resistance.

The main retracement zone support comes in at 26012 to 25685.

Daily Swing Chart Technical Forecast

Based on the early price action and Thursday’s close at 26225, the direction of the September E-mini Dow Jones Industrial Average on Friday is likely to be determined by trader reaction to the short-term 50% level at 26215.

Bullish Scenario

A sustained move over 26215 will indicate the presence of buyers. If this move can create enough upside momentum then look for buyers to pick up stops above highs at 26375 and 26408. Watch the price action and read the order flow if you can at 26494.

The daily chart indicates there is plenty of room to the upside over 26494 with the next two targets coming in at 27358 and 27397.

Bearish Scenario

A sustained move under 26215 will signal the presence of sellers. If enough downside momentum builds then look for sellers to drive the Dow into the main 50% level at 26012, followed by the main bottom at 25872.

Taking out 25872 will change the main trend to down. This should lead to a test of the main Fibonacci level at 25685. This is likely the trigger point for a steep break into a pair of bottoms at 25226 and 25032.

Overview

No one knows what Powell is going to say, or how traders will interpret his words. Therefore, I think the best thing to do is watch the market’s reaction to 26494. The Dow has been trading on the weak side of this level since August 6. This may be the line in the sand that determines the near-term direction of the Dow.

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