E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Setting Up for Short-Term Pullback

December E-mini Dow Jones Industrial futures are edging lower after giving back earlier gains in Wednesday’s pre-market trade. This follows a strong performance from the previous session as strong earnings numbers lifted sentiment.

At 06:39 GMT, December E-mini Dow Jones Industrial Average futures are trading 35286, down 37 or -0.10%.

In the cash market on Tuesday, the Dow advanced nearly 200 point, or 0.56%, for its third positive session in the last four days. Johnson & Johnson had the most positive impact on the 30-stock benchmark, while Procter & Gamble was the largest drag. J&J rose 2.34% and Procter and Gamble fell 1.18%.

Dow component Verizon reports before the opening bell on Wednesday. IBM is set to report after the market closes.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 35383 will reaffirm the uptrend. A move through 33984 will change the main trend to down. This is highly unlikely but due to the steep five day rally, the market could be setting up for a closing price reversal top.

A closing price reversal top won’t change the main trend to down, but it could alleviate some of the upside pressure if it triggers the start of a 2 to 3 day correction.

The short-term range is 35383 to 33383. The E-mini Dow is currently trading on the strong side of its retracement zone at 34619 to 34383, making it support.

The main range is 32835 to 35429. Its retracement zone at 34132 to 33826 is the major support.

Daily Swing Chart Technical Forecast

The direction of the December E-mini Dow Jones Industrial Average on Wednesday is likely to be determined by trader reaction to 35323.

Bullish Scenario

A sustained move over 35323 will indicate the presence of buyers. Taking out the intraday high at 35369 will indicate the buying is getting stronger. This move could launch a surge into the nearest main top at 35383, followed by the all-time high at 35429.

Bearish Scenario

A sustained move under 35323 will signal the presence of sellers. If this move creates enough downside momentum, a daily closing price reversal top could form. If this chart pattern is confirmed then look for a possible 2 to 3 day correction with 34619 the nearest downside target.