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James Hyerczyk

March E-mini Dow Jones Industrial Average futures closed lower on Friday, snapping a four-day winning streak as worries over the coronavirus’ impact on the Chinese economy outweighed the release of stronger-than-expected U.S. jobs data.

Profit-taking was also behind the weakness. Traders who bought early in the week trimmed positons ahead of the weekend, encouraged by comments suggesting a weakening economy ahead. Haibin Zhu, a China equity strategist at JPMorgan, cut his China GDP growth estimate to 1% for the first quarter.

At 21:14 GMT, March E-mini Dow Jones Industrial Average futures are trading 29046, down 282 or -0.96%.

The latest U.S. jobs report showed the economy added 225,000 jobs in January. Economists polled by Dow Jones expected a print of 158,000 jobs. Wages rose 3.1% on a year-over-year basis, also topping expectations.

Daily March E-mini Dow Jones Industrial Average

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 29475 will signal a resumption of the uptrend.  A move through 28105 will change the main trend to up. This is highly unlikely but there is room for a normal 50% to 61.8% retracement.

The minor trend is also up. However, a new minor top was formed at 29475 on Friday.

The short-term range is 28105 to 29475. This zone is the first downside target. Look for buyers on the first test of this area.

The main range is 27297 to 29475. Its retracement zone at 28386 to 28129 is a major support area. Trader reaction to this zone will determine the near-term direction of the Dow.


Short-Term Outlook

If the downside momentum continues into the close then look for a pullback into a potential support cluster at 28790 to 28745. Since the main trend is up, buyers are likely to come in on a test of this area.

If 28745 fails as support then look for the selling to possibly extend into the next uptrending Gann angle at 28425.

On the upside, the first target is the steep uptrending Gann angle at 29385. Overcoming this angle will put the Dow in a position to challenge the record high at 29475.

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