E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Reaction to 24792 Sets the Tone

June E-mini Dow Jones Industrial Average futures are inching higher early Tuesday as investors hope for another stellar performance like the previous session. On Monday, the blue chip average soared on optimism fueled by encouraging data from a potential COVID-19 vaccine trial, with investors also counting on more stimulus to rescue the economy from a deep economic slump.

At 06:50 GMT, June E-mini Dow Jones Industrial Average futures are trading 24669, up 162 or +0.66%.

What Monday’s rally demonstrates is that in order to sustain the upside momentum investors are going to want to see more fiscal stimulus from the government and more monetary stimulus from the Fed over the short-run, while they speculate on the development of a coronavirus vaccine, which is a longer-term possibility.

Given the time it takes to develop a vaccine, and the numerous successes and failures of trials over the long-run, if there is no short-term stimulus, the Dow is likely to become rangebound.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Monday when buyers took out the last main top at 24471. Realistically, I’d like to see 24792 taken out with conviction before I can say with confidence the trend has changed to up. A move through 22704 will change the main trend to down.

The minor trend is also up and the closing price reversal bottom at 22704 from May 14 is also helping to generate some badly needed upside momentum.

The main range is 29506 to 18086. Its retracement zone at 23796 to 25144 is controlling the longer-term direction of the Dow. Currently, it is acting as resistance.

The intermediate range is 26962 to 18086. Its retracement zone at 23571 to 22524 is support. This zone stopped the selling at 22704 last week.

Daily Swing Chart Technical Forecast

Given the strong close on Monday, we’re looking for buyers to go after the 24792 main top. Trader reaction to this level should set the tone for the session.

Bullish Scenario

Taking out 24792 will reaffirm the uptrend. This could lead to a quick test of the main Fibonacci level at 25144. Sellers could come in on the first test of this level. However, it should also be treated as a potential trigger point for an acceleration to the upside. There is plenty of room to rally over this level.

Bearish Scenario

The inability to overcome or to sustain a rally over 24792 will signal the presence of sellers. Falling back under the previous main top at 24471 will also indicate the selling pressure is getting stronger or the buying weaker. This could lead to a pullback into the major support cluster at 23796 to 23571.