E-mini Dow Poised to Reverse Earlier Losses

June E-mini Dow Jones Industrial Average futures are slightly lower late in the session on Monday, but edging closer to breakeven after recovering from steep early session weakness. The catalyst driving the blue chip index lower overnight was a plunge in Asian and European stock markets.

Fears over China’s COVID-19 outbreaks spooked investors already worried about faster U.S. interest rate hikes denting economic growth. These worries reverberated across world markets, with Chinese shares marking their biggest slump since pandemic selling in February 2020. Meanwhile, European stocks fell to their lowest level in over a month on fears of tighter restrictions in China.

At 19:13 GMT, June E-mini Dow Jones Industrial Average futures are trading 33712, down 16 or -0.05%. The SPDR Dow Jones Industrial Average ETF (DIA) is at $340.54, up $2.27 or +0.67%.

In other news, Brent and WTI crude oil dropped almost 5%. This was a drag on Dow component Chevron Corp, which fell more than 4%.

Investors were also on edge at the start of a week that will see megacap companies like Dow components Microsoft Corp and Apple Inc publish quarterly results.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low of 33230 will signal a resumption of the downtrend. A move through 35413 will change the main trend to up.

The short-term range is 32086 to 35413. The E-mini Dow is currently testing its retracement zone at 33750 to 33357.

The main range is 36708 to 32086. Its retracement zone at 34397 to 34942 is major resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini Dow into the close on Monday is likely to be determined by trader reaction to 33750.

Bullish Scenario

A sustained move over 33750 will indicate the presence of buyers. If this move can create enough upside momentum then look for a surge into a minor pivot at 34322. Overtaking this level could extend the rally into the main 50% level at 34397.

Bearish Scenario

A sustained move under 33750 will signal the presence of sellers. If this move generates enough downside momentum then look for a retest of the Fibonacci level at 33357.

The intraday low at 33230 would become the next target if 33357 fails as support. This is a potential trigger point for an acceleration to the downside with sellers looking to test the March 15 main bottom at 32578.