E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Price Behavior Suggests Weaker Buying, Stronger Selling

March E-mini Dow Jones Industrial Average futures notched a new record high as year-end appetite for risk continued. Sellers came in late in the session, driving the market lower. Nonetheless, the blue chip index was able to post a decent 0.45% gain for the week. The cash market Dow has gained 22.8% this year.

On Friday, March E-mini Dow Jones Industrial Average futures settled at 28610, up 128 or +0.45%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early Friday when buyers took out the previous day’s high at 28624.

The rally stalled at 28721 and the Dow closed lower. On paper, it looks like a closing price reversal top, however, it failed to close below the opening which weakens the potentially bearish signal a little. The market also closed below the mid-point of the trading session, which is good for the bears.

Buyers are looking for the market to continue to grind higher by producing higher-lows and higher-highs.

Sellers are looking to break the pattern of higher-highs and higher-lows. Given that assessment, taking out Friday’s low at 28596 will break the pattern. Depending on the selling volume, this could lead to a 2 to 3 day correction.

The minor trend changes to down on a trade through 27715. The main trend turns lower on a move through 27297. The Dow is in no position to change either of these trends, but there is room for a near-term correction.

The minor range is 27715 to 28721. Its retracement zone target is 28218 to 28099.

Daily Gann Angle Technical Analysis

The first down side target angle is at 28483. Since the main trend is up, buyers could come in on a test of this angle.

If the first angle fails as support then look for the selling to continue into the next uptrending Gann angle at 28385. Once again look for buyers on the first test of this angle.

We could see an acceleration to the downside if 28385 fails as support. The daily chart indicates the next downside target is the minor 50% level at 28218.

Short-Term Outlook

The Dow hit record highs every day during last week’s holiday shortened week. However, it also closed lower on two of the four sessions. This suggests that the buying may be getting weaker or the selling may be getting stronger.

We don’t expect to see a change in trend over the near-term, but we wouldn’t be surprised by a short-term correction just to alleviate the upside pressure.

Remember that the institutions and mutual funds took the week off. So the price behavior will be dictated by whether they decide to chase the market higher or play for a retracement into a value zone.