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James Hyerczyk
Dow Jones Industrial Average

September E-mini Dow Jones Industrial Average futures are trading sharply higher at the mid-session on Thursday. The rally is being fueled by firmer global bond yields and stronger-than-expected Chinese trade data. The price action suggests that money managers may have fully-priced in the negative headlines from earlier in the week and are now buying up undervalued or severely oversold stocks.

At 17:15 GMT, September E-mini Dow Jones Industrial Average futures are trading 26291, up 351 or +1.36%.

The strong three day rally has nearly erased all of this week’s earlier losses, putting the Dow in a position to challenge last week’s close at 26449.

Daily September E-mini Dow Jones Industrial Average

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher following the closing price reversal bottom at 25032 on August 6 and it subsequent confirmation.

The main trend will change to up on a trade through 27397, however, buyers will have to take out a short-term retracement zone before we can get there.

The short-term range is 27397 to 25032. Its retracement zone at 26215 to 26494 is the primary upside target. This zone is resistance. It’s also currently being tested.

The main range is 24626 to 27397. Its retracement zone at 26012 to 25685 is controlling the near-term direction of the Dow. This zone is new support.


Daily Technical Forecast

Based on the early price action and the current price at 26291, the direction of the September E-mini Dow Jones Industrial Average into the close is likely to be determined by trader reaction to the downtrending Gann angle at 26245.

Bullish Scenario

A sustained move over 26245 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into the short-term Fibonacci level at 26494. Sellers could come in on the first test of this level. Overcoming it, however, could trigger an acceleration to the upside with the next target angle coming in at 26821.

Bearish Scenario

A sustained move under 26245 will signal the presence of sellers. The next move could be labored with potential support levels at 26215, 26130 and 26012.

The trigger point for an acceleration to the downside is 26012. Taking out this level could trigger a steep drop into the main Fibonacci level at 25685.

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