E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Needs to Hold 28040 to Sustain Momentum

December E-mini Dow Jones Industrial Average futures are trading higher shortly before the close on Friday, putting it in a position to close higher for the second consecutive week. The increased demand for riskier assets is being fueled by hopes of more fiscal aid and growing expectations of a Democratic sweep in next month’s presidential and senatorial elections.

At 20:05 GMT, December E-mini Dow Jones Industrial Average futures are trading 28488, up 178 or +0.63%.

Several Wall Street banks forecast a stimulus package no matter which candidate wins, but say that a Biden presidency, if Democrats also retake control of the Senate, would be likely to result in a bigger one. UBS Asset Management, for example, is assigning a 75% probability of a Biden win.

“Besides possibly losing the presidency, Republicans may also lose control of the Senate as betting odds are giving Democrats a near 70% chance of taking the Senate,” Brown Brothers Harriman strategists said.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out yesterday’s higher. A move through 26407 will change the main trend to down.

The minor trend is also up. A trade through 27531 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is 29050 to 26407. Its retracement zone at 28040 to 27729 is new support. Holding above this zone should continue to generate the upside momentum needed to challenge the September 30 top at 29050.

Short-Term Outlook

The daily chart indicates there is plenty of room to the upside and no visible resistance until 29050.

The nearest support is 28040. Ideally, buyers will come in on a test of this level to sustain the upside momentum. If it fails then look for the selling to possible extend into the 50% level at 27729.

A pullback into 28040 to 27729 will not be the end of the world, it may allow traders to build a support base which may be needed to support a rally into 29050. However, momentum is likely to shift to the downside if 27729 fails as support.