E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Major Support Zone 34132 – 33826

December E-mini Dow Jones Industrial Average futures are down sharply on Tuesday as technology shares continued to be a drag on the entire stock market. The selling pressure was driven by a surge in Treasury yields to a three-month high and concerns over a budget stalemate in Washington.

At 18:53 GMT, December E-mini Dow Jones Industrial Average futures are trading 34330, down 413 or -1.19%.

The 10-year Treasury yield continued its speedy climb on Tuesday, rising as high as 1.558% as investors bet the Fed would carry through on its promise to curb its emergency bond-buying stimulus as inflation jumps.

Also weighing on sentiment was a budget showdown in Washington. Senate Republicans blocked a House-passed bill Monday that would have funded the government into December and suspended the debt ceiling until December of 2022.

In stock related news, Microsoft and Goldman Sachs Group were the biggest losers on Tuesday, dropping 2.79% and 1.99% respectively.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher despite today’s sell-off.

A trade through 35383 will change the main trend to up, while a move through 33478 signals a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through 34934 will reaffirm the minor trend.

The main range is 32835 to 35429. Its retracement zone at 34132 to 33826 is potential support. Buyers came in at 34121 earlier today.

The minor range is 33478 to 34934. Its retracement zone at 34206 to 34034 was also tested successfully earlier today.

The short-term range is 35383 to 33478. Its retracement zone at 34431 to 34655 is the primary upside target and potential intraday resistance.

Daily Swing Chart Technical Forecast

The direction of the December E-mini Dow into the close is likely to be determined by trader reaction to 34431.

Bullish Scenario

A sustained move over 34431 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for the rally to possibly extend into 34655.

Bearish Scenario

A sustained move under 34431 will signal the presence of sellers. If this move generates enough downside momentum then look for a retest of the supply cluster at 34206, 34132 and 34034.

Taking out 34034 will indicate the selling pressure is getting stronger with 33826 the next target.

Side Notes:  Buyers came in on the test of the value area at 34132 to 33826. This indicates they are trying to form a secondary higher bottom. Nonetheless, the buying still has to be strong enough to take out 34431 to 34655 otherwise a potentially bearish secondary lower top will form.