E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Pressured by Friday’s Reversal Top

September E-mini Dow Jones Industrial Average futures are edging lower in the pre-market trade on Tuesday after the blue chip average posted a potentially bearish closing price reversal top on Friday before the three-day Labor Day weekend. It was the fourth closing price reversal top since August 30.

Friday’s losses came after the August jobs report came in short of expectations, highlighting continued concern about the spread of COVID and its delta variant. Non-Farm Payrolls increased by 235,000 in August, the Labor Department reported, but economists surveyed by Dow Jones expected 720,000 jobs.

At 09:04 GMT, September E-mini Dow Jones Industrial Average futures are trading 35361, down 70 or -0.20%.

The price action suggests investors believe the labor market pressures will dissipate and the Federal Reserve will eventually begin its tapering process. At its September 21-22 policy meeting, it will probably err on the side of caution to avoid acting prematurely especially while the country is trying to get control of the current wave of the pandemic.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside following the formation of the closing price reversal top on Friday.

A trade through 35504 will negate the closing price reversal top and signal a resumption of the uptrend with the August 16 main top at 35547 the next likely upside target.

A trade through 35248 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 day correction. The main trend will change to down on a trade through 35114.

The minor trend is also up. A trade through 35219 will change the minor trend to down. Taking out this level also confirm a shift in momentum to the downside.

The minor range is 35114 to 35504. Its 50% level or pivot is 35309.

The short-term range is 34494 to 35504. If the main trend changes to down then look for a pullback into its retracement zone at 34999 to 34880.

The main range is 33623 to 35504. Its retracement zone at 34585 to 34358 is a value zone. A test of this area could bring in new buyers.

Daily Swing Chart Technical Forecast

The direction of the September E-mini Dow Jones Industrial Average futures contract on Tuesday is likely to be determined by trader reaction to the pivot at 35309.

Bullish Scenario

A sustained move over 35309 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible surge into 35504. This is a potential trigger point for a rally into the record high at 35547.

Bearish Scenario

A sustained move under 35309 will signal the presence of sellers. Taking out 35248 will confirm the closing price reversal top and a trade through 35219 will change the minor trend to down.

If 35219 fails then look for the selling to possibly extend into the main bottom at 35114. If this price fails then look for the move to possibly extend into the retracement zone at 34999 to 34880.