E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Weaker after Snapping Winning Streak

September E-mini Dow Jones Industrial Average futures are inching lower early Thursday after snapping its five-day winning streak the previous session. The price action suggests the recent rally may be losing steam.

Early in the session on Wednesday, the blue chip average was driven lower by disappointing earnings results from Target. Although the stock is not a Dow component, the news cast a negative tone on investor sentiment.

Later in the session, a mixed U.S. Retail Sales report failed to impress investors because it also drove up the chances of a 75 basis point rate hike by the Fed in September.

The Fed minutes did influence the trade however. Since it was interpreted as less-hawkish, trader reduced the chances of a 75 basis point rate hike and increased the odds of a 50 basis point rate hike. This was enough to raise the E-mini Dow from its intraday low.

At 04:54 GMT, September E-mini Dow Jones Industrial Average futures are trading 33937, down 26 or -0.08%. On Wednesday, the SPDR Dow Jones Industrial Average ETF (DIA) settled at $340.21, down $1.53 or -0.45%.

Looking Ahead …

After the Closing Bell on Wednesday, Dow component Cisco advanced more than 3% following the release of its fiscal fourth-quarter results. This move may have put a small floor under the market, but it wasn’t impressive enough to turn it higher.

Later today, traders will get the chance to react to a slew of U.S. economic data including the Philly Fed Manufacturing Index, Weekly Unemployment Claims, Existing Home Sales and the Conference Board’s Leading Index.

The Philly Fed report could carry the most weight especially if it comes in extremely weak like the Empire State Manufacturing Index did on Monday.

Technically speaking, the Dow may be running a little too hot which could give the Fed a reason to try to knock it down with an aggressive interest rate hike.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 34246 will signal a resumption of the uptrend. A move through 32342 will change the main trend to down.

The nearest support is the retracement zone at 33202 to 32522.

Daily Swing Chart Technical Forecast

Trader reaction to 34016 is likely to determine the direction of the September E-mini Dow Jones Industrial Average on Thursday.

Bearish Scenario

A sustained move under 34016 will indicate the presence of sellers. This could lead to near-term break into the main Fibonacci level at 33202.

Bullish Scenario

A sustained move over 34016 will signal the presence of buyers. If this creates enough upside momentum then look for a test of this week’s high at 34246. Taking out this level will signal a resumption of the uptrend. If this creates enough upside momentum then look for an eventual move into the April 21 main top at 35405.