E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Reaction to 34132 Sets Early Tone

December E-mini Dow Jones Industrial Average futures closed lower on Tuesday as some investors moved to the sidelines ahead of Wednesday’s U.S. consumer inflation report and the release of the minutes from the Fed’s latest meeting. Meanwhile, bond yields are poised to move higher and the U.S. Dollar is pressing its highest level in a year on bets that monetary policy will soon be tightened.

On Tuesday, December E-mini Dow Jones Industrial Average futures settled at 34193, down 183 or -0.53%.

Two U.S. Federal Reserve policymakers said on Tuesday that the central bank has kept pace with a planned move to reduce its bond buying program, cementing expectations that the Fed will start withdrawing its crisis-era stimulus as soon as next month.

On the upside, Nike Inc closed 2.04% higher. Salesforce.Com Inc finished at +1.92%. On the downside, Intel Corp lost 2.38% and Amgen Inc was off by 2.33%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher.

A trade through 34934 will change the main trend to up. A move through 33383 will signal a resumption of the downtrend.

The main range is 32835 to 35429. Its retracement zone at 34132 to 33826 is the next key downside target and potential support. Buyers could step in on a test of this area.

The short-term range is 35383 to 33383. Its retracement zone at 34383 to 34619 is resistance. Sellers are trying to form another secondary lower top.

Daily Swing Chart Technical Forecast

The direction of the December E-mini Dow Jones Industrial Average futures contract early Wednesday is likely to be determined by trader reaction to 34132.

Bearish Scenario

A sustained move under 34132 will indicate the presence of sellers. If this move creates enough downside momentum then look for a possible acceleration into 33826.

Buyers could come in on the first test of 34132 – 33826, but if the bottom falls out then look for another acceleration into 33383.

Bullish Scenario

A sustained move over 34132 will signal the presence of buyers. If this move creates enough upside momentum then look for a surge into 34383.

Since the main trend is down, sellers could come in on the first test of 34383. Overtaking it, however, could trigger an acceleration into 34619. Look for sellers again.

Taking out 34619 could trigger a surge into 34854 and 34934.