E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Weakens Under 24543, Strengthens Over 24598

March E-mini Dow Jones Industrial Average futures tumbled for a third session on Friday, capping off their worst week since the 2008-2009 financial crisis, as worries over the coronavirus and its impact on the economy continue to rattle investor sentiment.

For the week, the cash Dow fell more than 12% – its biggest weekly percentage loss since 2008. On a point basis, the cash Dow fell more than 3,500 points, far and away its largest weekly point loss ever. It also ended the week in correction territory, down 14.1% from an intraday record high set February 12.

On Friday, March E-mini Dow Jones Industrial Average settled at 25364, down 188 or -0.74%.

Daily Technical Analysis

The main trend is down according to the daily swing chart with nearly all of last year’s swing bottoms wiped out last week.

A trade through 29543 will change the main trend to up. This is highly unlikely. Before one can even think about a change in trend, the Dow is going to have to form a “W” chart pattern, or a closing price reversal bottom.

A “W” formation will indicate a support base is being formed. This could take 3 to 5 days to form. A closing price reversal bottom could trigger a 2 to 3 day counter-trend rally.

The main range is formed by the December 24, 2018 main bottom at 21452 and the February 13 all-time high at 29543. Its retracement zone at 25498 to 24543 is currently being tested.

Short-term Outlook

Traders are looking for a sharply lower opening due to the release of bearish manufacturing and non-manufacturing from China over the weekend. However, since the data was based on February activity and the country has since increased factory production, some traders may treat the break as a buying opportunity, hoping for better numbers in March.

The near-term direction of the March E-mini Dow Jones Industrial Average on Friday is likely to be determined by trader reaction to the Fibonacci level at 24543.

Taking out 24543 could trigger an acceleration to the downside with potential targets an uptrending Gann angle at 23836, followed by another uptrending Gann angle at 22644 and the January 4, 2019 main bottom at 22563.

If 22563 fails as support then look for the selling to extend into the December 24, 2018 main bottom at 21452. Taking out this bottom will mean last year’s entire rally has been wiped out.

Holding 24543 will indicate the return of buyers. Overtaking 25498 will indicate the buying is getting stronger with the first Gann angle target coming in at 26983.

Essentially, we’re looking for a bullish tone to possibly develop on a move over 25498, and for the bearish move to continue on a sustained move under 24543.