E-mini Dow Jones Industrial Average (YM) Futures Analysis – Could Weaken if 23599 Top Holds
December E-mini Dow Jones Industrial Average futures closed higher on Friday after confirming the previous day’s potentially bearish closing price reversal top. The current chart pattern doesn’t indicate the trend is getting ready to turn down, but it may be indicating the selling is greater than the buying at price levels.
Daily Swing Chart Analysis
The main trend is up according to the daily swing chart. However, last Wednesday’s closing price reversal top may be signaling a shift in momentum to down. The confirmation of the potentially bearish chart pattern and the close below the previous top at 23557 may also be indicating increasing selling pressure.
Of course, due to last week’s below average volume we have to take the rally and the reversal with a grain of salt. We’re not sure yet how the major institutions and mutual funds will respond to last week’s price action. I tend to believe they are not going to be willing to chase this market higher before testing a support area.
A trade through 23599 will negate the closing price reversal top. It will also signal a resumption of the uptrend.
A move through 23205 will change the main trend to down. This could trigger the start of a steep break since the next major bottom doesn’t come in until 22174.
The short-term range is 23205 to 23599. Its retracement zone at 23402 to 23356 is the first downside target.
The intermediate range is 22174 to 23599. If the trend changes to down then its retracement zone at 22887 to 22718 will become the primary downside target. This is followed by the main retracement zone at 22572 to 22330.
Daily Swing Chart Forecast
Based on Friday’s close at 23517, the direction of the Dow today is likely to be determined by trader reaction to the closing price reversal top at 23599.
A sustained move over 23599 will signal the return of buyers.
A sustained move under 23599 will indicate the presence of sellers and that they are defending the reversal top. This could lead to a test of the retracement zone at 23402 to 23356. Since the main trend is up, we could see a technical bounce on the first test of this area.
A trade through 23356 will indicate the selling is getting stronger with the next major target the main bottom at 23205. The trend will change to down if this bottom is taken out.
This article was originally posted on FX Empire