E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Trade Through 28499 Confirms Tuesday’s Closing Price Reversal Top

March E-mini Dow Jones Industrial Average futures closed lower on Tuesday in a pre-holiday shortened session. Needless to say, volume was well below average. Earlier in the week, the Dow hit a record high. The market was closed on Wednesday for Christmas, however, low volume is likely to be the highlight on Thursday and Friday, and perhaps until after New Year’s Day.

On Tuesday, March E-mini Dow Jones Industrial Average futures settled at 28508, down 42 or -0.15%.

Tuesday marked the official start of the Santa Claus rally period, which happens on the final five trading days of the year and the first two trading days of the new year. Unfortunately, the Santa Claus rally began with a whimper as the Dow posted a potentially bearish closing price reversal top.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, the closing price reversal top could be an early indication that momentum is getting ready to shift to the downside.

On Tuesday, the market posted a closing price reversal top. This doesn’t indicate an impending change in trend, however, it may be indicating the selling is greater than the buying at current price levels and that the Dow is ripe for a short-term correction.

A trade through 28499 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 day correction. A move through 28588 will negate the closing price reversal top and signal a resumption of the uptrend.

With the market still hovering near an all-time high, other than 28588, there is no actual resistance. At the same time, potential support areas are retracement zones at 28152 to 28048, 27943 to 27790 and 27590 to 27354.

Daily Swing Chart Technical Forecast

Based on Tuesday’s price action and the current price at 28508, the direction of the March E-mini Dow Jones Industrial Average on Thursday is likely to be determined by trader reaction to Tuesday’s low at 28499.

Bullish Scenario

A sustained move over 28499 will indicate the presence of buyers. If this move can create enough upside momentum then look for a retest of 28588. Taking out this level will normally trigger an acceleration to the upside, however, due to the low volume, we’re not sure what is going to happen on a breakout.

Bearish Scenario

Taking out 28499 will confirm the closing price reversal top. This could trigger an acceleration to the downside, but once again, it all depends on the size of the selling volume. Once the sell-off is set in motion, the next potential downside target is the short-term 50% level at 28152 over the next 2 to 3 sessions.