E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Overcoming 26012 Puts Dow on Strong Side of Major Retracement Zone

Based on Friday’s price action and the close at 25907, the direction of the September E-mini Dow Jones Industrial Average on Monday is likely to be determined by trader reaction to the main 50% level at 26012.
James Hyerczyk
E-mini Dow Jones Industrial Average

September E-mini Dow Jones Industrial Average futures rallied on Friday as a rebound in bond yields eased fears of a recession that send stocks plunging earlier in the week.

Helping to underpin stocks were a rise in bond yields, which climbed back from their historic lows on Friday. Strong bank stocks also helped drive the Dow higher. They rallied along with the rise in bond yields, led by the Bank of America and Citigroup.

On Friday, September E-mini Dow Jones Industrial Average settled at 25907, up 332 or +1.28%.

Retail giant Walmart continued to underpin the Dow after reporting strong earnings and solid retail sales on Thursday. On Friday, Dow component Apple impressed as investors bought back stocks beaten down by trade war fears.

Daily September E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher with the formation of a pair of closing price reversal bottoms at 25226 on August 15 and 25032 on August 6.

A trade through 26408 will change the main trend to up. A move through 25226 will shift momentum to the downside, and a trade through 25032 will signal a resumption of the downtrend.

The main range is 24626 to 27397. Its retracement zone at 26012 to 25685 is controlling the near-term direction of the average. On Friday, the Dow closed inside this zone.

The short-term range is 25032 to 26408. Its retracement zone at 25720 to 25558 is potential support. It also straddles the main Fibonacci level at 25685.

The intermediate range is 27397 to 25032. Its retracement zone at 26215 to 26494 is resistance. This zone stopped the rally at 26408 on August 13.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at 25907, the direction of the September E-mini Dow Jones Industrial Average on Monday is likely to be determined by trader reaction to the main 50% level at 26012.

Bullish Scenario

A sustained move over 26012 will indicate the presence of buyers. If this generates enough upside momentum then look for the buying to possibly extend into the intermediate 50% level at 26215. This is another trigger point for an acceleration into the main top at 26408, followed closely by the intermediate Fibonacci level at 26494. Given the room over this level, this looks like the trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 26012 will signal the presence of sellers. This could drive the Dow into a pair of Fibonacci levels at 25685 and 25558.

A failure at 25558 makes the minor bottom at 25226 and the main bottom at 25032 the next likely downside targets.

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