E-mini Dow: Trade Through 34002 Changes Main Trend to Down

June E-mini Dow Jones Industrial Average futures are down sharply shortly after the mid-session on Friday, putting it in a position to post a consecutive weekly decline, as investors assessed a slew of corporate earnings reports and the impact of rising interest rates.

At 17:55 GMT, June E-mini Dow Jones Industrial Average futures are trading 34015, down 694 or -2.00%. The SPDR Dow Jones Industrial Average ETF is at $338.32, down $9.39 or -2.70%.

Investors Spooked by Hawkish Federal Reserve

Concerns about risks from interest rate hikes continued to reverberate after Federal Reserve Chair Jerome Powell’s hawkish pivot on Thursday, where he backed moving more quickly to combat inflation and said a 50-basis point increase would be “on the table” when the Fed meets in May.

US Business Activity Eases

U.S. business activity slowed in April as soaring costs for raw materials, fuel and labor pushed input prices to a record high, according to a survey on Friday, which also showed an ebb in sentiment at the start of the second quarter, according to Reuters.

The survey also showed businesses were passing on the higher cost burdens to consumers, with its measure of prices for goods and services produced by businesses hitting an all-time high.

The record input and output prices suggest inflation could remain uncomfortably high, warranting aggressive monetary policy tightening from the Federal Reserve.

With price pressures mounting, business sentiment slipped to a six-month low in April. The ebb in sentiment was across the manufacturing and services industries.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower. A trade through 34002 will change the main trend to down. A move through 35413 will signal a resumption of the uptrend.

The minor trend is down. It changed to down earlier today when sellers took out the minor bottom at 34179. The change in trend reaffirmed the momentum shift.

Momentum first shifted lower shortly after the opening when sellers confirmed the previous session’s closing price reversal top.

The main range is 36708 to 32086. The E-mini Dow is currently trading on the weak side of its retracement zone at 34397 to 34942, making it resistance.

The short-term range is 32086 35413. Its retracement zone at 33750 to 33357 is the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the June E-mini Dow into the close on Friday is likely to be determined by trader reaction to 34397.

Bearish Scenario

A sustained move under 34397 will indicate the presence of sellers. Taking out 34002 will change the main trend to down, which should create the downside momentum needed to challenge 33750 to 33357.

Bullish Scenario

A sustained move over 34397 will signal the return of buyers. This would put the market in a position to possibly challenge 34942 late in the session.