E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Trade Under 26308 Targets 25144

June E-mini Dow Jones Industrial Average futures are down sharply shortly after the cash market opening as investors reacted to reports that the number of coronavirus cases increased in some states that are reopening up from lockdowns. A bleak outlook for the economy by the Federal Reserve on Wednesday also weighed on the market.

At 15:06 GMT, June E-mini Dow Jones Industrial Average futures are trading 25959, down 1002 or -3.72%.

Friendly monetary policy from the Federal Reserve cannot “offset a severe COVID second wave,” said Dennis DeBusschere, macro research analyst with Evercore ISI, in a note.

“With Texas, Arizona, California new cases and hospitalizations increasing and investors concerned that recent protest will fuel a wave of infections, the risk of persistently weak economic and earnings growth has increased. S&P fair value estimates are falling as a result.”

On Wednesday, the Federal Reserve warned the economy will contract by 6.5% in 2020 before expanding by 5% next year. The central bank also said it will keep rates at currently low levels through 2022.

During the sell-off, investors should watch for money to move out of “reopening stocks” and back into “stay at home stocks”.

Shares of United Airlines, Delta, American and Southwest all dropped more than 7%. Carnival Corp. and Norwegian Cruise Line shares fell more than 12%. Gap and Kohl’s shares traded lower by 6.8% and 9%, respectively.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on June 9.

A trade through 27624 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 22704.

The minor trend is also up. A trade through 24991 will change the minor trend to down. This will also confirm the shift in momentum.

The minor range is 24991 to 27624. Its 50% level at 26308 is the key level to watch today. It may act like a pivot throughout the session.

The main range is 22704 to 27624. Its retracement zone at 25164 to 24583 is another potential downside target zone.

The major longer-term range is 29506 to 18086. Its retracement zone at 25144 to 23796 is controlling the longer-term direction of the market.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the June E-mini Dow Jones Industrial Average the rest of the session on Thursday is likely to be determined by trader reaction to the minor pivot at 26308

Bearish Scenario

A sustained move under 26308 will indicate the presence of sellers. If this move continues to create enough downside momentum then we could see an acceleration into the major Fibonacci level at 25144.

Bullish Scenario

A sustained move over 26308 will signal the presence of buyers. If this move creates enough upside momentum then look for a possible intraday retracement into 26755. Overtaking this level could trigger a further rally into 27624.