E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Testing Major Retracement Zone at 25967 to 25796

The blue chip Dow Jones Industrial Average is trading sharply lower as we approach the mid-session. Bellwether and Dow components Caterpillar and Boeing are the biggest drags on the market since the companies stand to lose the most if the trade dispute between the United States and China escalates.

The catalyst behind today’s weakness is a comment from U.S. Trade Representative Robert Lighthizer. He told reporters that the U.S. will increase levies on Chinese imports on Friday. Keith Parker, a strategist at UBS, said in a note, “A full-blown trade war would shave off 45 basis points from global economic growth, while China’s GDP would take a hit of between 1.2% and 1.5%.”

At 15:42 GMT, June E-mini Dow Jones Industrial Average futures are trading 26005, down 401 or -1.51%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. It turned down on Monday when sellers took out the previous main bottom at 26060. The main trend will change to up on a trade through 26694.

The minor trend is also down. A trade through 26518 will change the minor trend to up. This will also shift momentum to the upside.

The main range is 25246 to 26694. Its retracement zone at 25967 to 25796 is currently being tested. It is controlling the near-term direction of the market.

The short-term range is 26694 to 25932. Its retracement zone at 26313 to 26403 is resistance. Despite yesterday’s strong recovery, this zone stopped the rally.

Daily Technical Forecast

Based on the early price action, the direction of the June E-mini Dow Jones Industrial Average into the close is likely to be determined by trader reaction to the 50% level at 25967.

Bearish Scenario

A sustained move under 25967 will indicate the presence of sellers. Look for a labored break, however, because of potential support at yesterday’s low at 25932, and a pair of uptrending Gann angles at 25902 and 25857. These are followed by the Fibonacci level at 25796.

Look for an acceleration to the downside if 25796 fails. This could trigger a steep break into a pair of uptrending Gann angles at 25617 and 25574.

Bullish Scenario

Holding above 25967 will indicate that buyers are coming in on the break. They may be seeing value inside 25967 to 25796. The daily chart shows there is plenty of room to the upside with the next targets the short-term 50% level at 26337, a downtrending Gann angle at 26406 and a short-term Fibonacci level at 26427.