March E-mini Dow Jones Industrial Average futures fell sharply last week, wiping out its gains for the year, as investors grew increasingly worried about the potential economic impact of China’s fast-spreading coronavirus.
Dow stocks were particularly sensitive to the developments in China. Caterpillar shares fell 3% on Friday after the industrial giant’s CEO warned about “global economic uncertainty” in the company’s latest quarterly earnings report, in part a reference to the virus. Caterpillar also issued disappointing earnings guidance for 2020.
Last week, March E-mini Dow Jones Industrial Average futures settled at 28196, down 737 or -2.61%.
Weekly Swing Chart Technical Analysis
The main trend is up according to the weekly swing chart. A trade through 28084 will change the main trend to down. A move through 29362 will signal a resumption of the uptrend.
The short-term range is 28084 to 29362. Its 50% level or pivot at 28723 is resistance. This level is also controlling the short-term direction of the Dow.
The first main range is 25710 to 29362. Its 50% level at 27536 is the first downside target after the change in trend.
The second main range is 25326 to 29362. Its retracement zone at 27362 to 26890 is the next downside target.
The third main range is 24859 to 29362. Its retracement zone at 27111 to 26579 is the final retracement zone target.
Weekly Swing Chart Technical Forecast
Based on last week’s price action and the close at 28196, the direction of the March E-mini Dow Jones Industrial Average futures contract this week is likely to be determined by trader reaction to the main bottom at 28084.
A sustained move over 28084 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the pivot at 28723. Overtaking this level will put the Dow in a position to challenge the all-time high at 29362.
A sustained move under 28084 will signal the presence of sellers. This could trigger a steep break into a series of 50% levels at 27536, 27362 and 27111.
This article was originally posted on FX Empire
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