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E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Trader Reaction to 29279 Sets the Tone

James Hyerczyk

March E-mini Dow Jones Industrial Average futures rose on Friday on optimism over corporate earnings, economic data and indications of resilience in a Chinese economy battered by a prolonged trade dispute with the United States.

Investor sentiment built all week after the U.S. and China signed Phase One of a trade deal that called a truce to an 18-month tariff dispute. On Friday, data showed China ended 2019 on a somewhat firmer note, even as economic growth cooled to its weakest in nearly 30 years in the last year. In the U.S., data showed homebuilding surged to a 13-year high in December, suggesting the housing market recovery was back on track amid low mortgage rates.

On Friday, March E-mini Dow Jones Industrial Average futures settled at 29279, up 39 or +0.13%.

After an upbeat showing from banks earlier this week, oilfield service provider Schlumberger NV reported a slightly better-than-expected quarterly profit, sending its shares up 2.1%.

Daily March E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 29362 will signal a resumption of the uptrend. The main trend will change to down on a move through 28084.

We don’t expect to see a change in trend, but today’s session begins with the market up eight days from its last main bottom. This puts it in the window of time for a closing price reversal top. This won’t change the trend, but if confirmed, it could lead to a 2 to 3 day correction, or a 50% to 61.8% correction of the last rally.

The minor trend is also up. A trade through 28737 will change the minor trend to down. This will shift momentum to the downside.

The minor range is 28737 to 29362. It 50% level at 29049 is the first support.

The short-term range is 28737 to 29362. Its retracement zone at 28723 to 28572 is the second support area.

The third support area is 28330 to 28086.

Daily Swing Chart Technical Forecast

Given the prolonged move up in terms of price and time, the direction of the March E-mini Dow Jones Industrial Average on Monday is likely to be determined by trader reaction to Friday’s close at 29279.

Bullish Scenario

A sustained move over 29279 will indicate the presence of buyers. Taking out Friday’s high at 29362 will indicate the buying is getting stronger.

Bearish Scenario

A sustained move under 29279 will signal the presence of sellers. Taking out Friday’s low at 29242 will indicate the selling is getting stronger. If this creates enough downside momentum then look for a break into the minor pivot at 29049. Watch for a technical bounce on the first test of this level. Look for an acceleration to the downside if this level fails with the next target 28723.

Closing Price Reversal Top

Taking out 29362 then closing lower for the session will form a potentially bearish closing price reversal top. This won’t change the main trend to down, but it could lead to a 2 to 3 day break with 28723 the minimum downside target.

This article was originally posted on FX Empire