E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Weakens Under 25558, Strengthens Over 25720

Based on the early price action and the current price at 25614, the direction of the September E-mini Dow Jones Industrial Average into the close is likely to be determined by trader reaction to the short-term Fibonacci level at 25558.
James Hyerczyk
E-mini Dow Jones Industrial Average

September E-mini Dow Jones Industrial Average futures are trading sharply lower on Wednesday at the mid-session. Fears of a U.S. recession are encouraging investors to book profits and trim positions, while moving money into the safe-haven Japanese Yen, gold and Treasury bonds.

Some of the selling is related to weaker-than-expected industrial production and retail sales reports from China, and flat GDP data from Germany and the Euro Zone. The biggest influence on the market is the inverted 2 and 10 year Treasury yield curve. This is a reliable recession signal that tends to predict an economic downturn in about 22 months.

At 16:25 GMT, September E-mini Dow Jones Industrial Average futures are trading 25614, down 700 or -2.67%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through the new main top at 26408 will change the main trend to up. A move through 25032 will signal a resumption of the downtrend.

The main range is 24626 to 27397. Its retracement zone at 26012 to 25685 is controlling the near-term direction of the Dow. The market is currently trading on the weak side of this zone.

The intermediate range is 27397 to 25032. Its retracement zone at 26215 to 26494 is resistance. This zone stopped the rally on Tuesday at 26408.

The short-term range is 25032 to 26408. Its retracement zone at 25720 to 25558 is the next downside target. Its straddles the main Fibonacci level at 25685.

Daily Technical Forecast

Based on the early price action and the current price at 25614, the direction of the September E-mini Dow Jones Industrial Average into the close is likely to be determined by trader reaction to the short-term Fibonacci level at 25558.

Bearish Scenario

A sustained move under 25558 will indicate the presence of sellers. This could trigger a break into the long-term uptrending Gann angle at 25442. Watch for a technical bounce on the first test of this angle.

If 25442 fails as support then look for an acceleration into the next uptrending angle at 25034, followed closely by the main bottom at 25032. Taking out this angle could trigger a further break into the next uptrending Gann angle at 24830. This is the last potential support angle before the 24626 main bottom.

Bullish Scenario

A sustained move over 25558 will signal the presence of buyers. Overtaking the main Fibonacci level at 25685 will indicate the short-covering is getting stronger. Overcoming the short-term 50% level at 25720 could trigger an acceleration into a downtrending Gann angle at 25989. This is followed by the main 50% level at 26012.

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