E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Weak Under 33738, Strong Over 33926

September E-mini Dow Jones Industrial Average futures are trading lower during the early session, testing an area that separates the market from consolidation and a steep decline.

The price action suggests investors are still digesting yesterday’s events that included the Fed’s raising its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, after its two-day policy meeting concluded on Wednesday afternoon.

The Fed also indicated that rate hikes could come as soon as 2023, after saying in March that it saw no increases until at least 2024. The so-called dot plot of individual member expectations pointed to two hikes in 2023.

At 08:50 GMT, September E-mini Dow Jones Industrial Average futures are trading 33791, down 114 or -0.34%.

Even with the Fed coming across as hawkish, in its post-meeting statement, it reiterated the view that inflationary pressures were “transitory.”

Fed Chairman Jerome Powell also said in a press conference following the meeting that the central bank’s forecast needed to be taken with a “big pinch of salt.”

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out yesterday’s low. A trade through the intraday low at 33687 will signal a resumption of the downtrend.

A trade through 34711 will change the main trend to up. This is highly unlikely, but with the Dow down eight sessions from its last main top, it is currently inside the window of time to form a potentially bullish closing price reversal bottom.

The short-term range is 33131 to 34721. The Dow is currently testing its retracement zone at 33926 to 33738. Trader reaction to this area could decide whether prices rise into a consolidation area, or if there is a steep decline.

Another short-term range is 34883 to 33131. Its 50% price at 34007 is another level controlling the near-term direction of the trade.

The new minor range is 34721 to 33687. If a short-covering rally gains traction, prices could rebound back to 34204 to 34326.

Daily Swing Chart Technical Forecast

The direction of the September E-mini Dow Jones Industrial Average futures contract on Thursday is likely to be determined by trader reaction to 33738.

Bearish Scenario

A sustained move under 33738 will indicate the presence of sellers. If this move creates enough downside momentum then look for an acceleration to the downside with the next major targets a pair of main bottoms at 33300 and 33131.

Bullish Scenario

A sustained move over 33738 will signal the presence of buyers. This could trigger the start of a labored rally with 33926 and 34007 the first resistance targets. The latter is a potential trigger point for an acceleration into 34204 to 34326. Since the main trend is down, sellers could come in on a test of this zone. They are going to try to form a secondary lower top.