Trader reaction to the minor 50% level at 28436 on Friday should determine the direction of the E-mini Dow.
December E-mini Dow Jones Industrial Average futures finished lower on Thursday, but upbeat action toward the end of the session suggests a short-term bottom may have formed.
The market was under pressure early in the session after a rise in weekly jobless claims compounded worries about a stalling economic recovery and fading hopes for more fiscal aid before the election.
The Dow mounted a solid comeback rally, however, and nearly moved higher for the session after U.S. President Donald Trump said he is willing to raise his offer of $1.8 trillion for a COVID-19 relief deal with Democrats in Congress, but the idea was shot down by his fellow Republican, Senate Leader Mitch McConnell.
On Thursday, December E-mini Dow Jones Industrial Average futures settled at 28386, down 28 or -0.10%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 28846 will signal a resumption of the uptrend. The market isn’t close to changing the main trend to down, but there is room for a normal 50% to 61.8% correction of the current rally.
The minor trend is also up. A trade through 27531 will change the minor trend to down. This will shift momentum to the downside.
The new minor range is 28846 to 28025. Its retracement zone at 28436 to 28532 is the primary upside target. Aggressive counter-trend sellers are likely to step in on a test of this area. They are going to try to form a potentially bearish secondary lower top. Bullish traders are going to try to take out this zone in order to challenge the top at 28846.
On the downside, the first support is a Fibonacci level at 28036. This was tested successfully on Thursday. The next two potential support levels are 50% prices at 27724 and 27627.
Thursday’s close suggests buyers are going to go after the minor 50% level at 28436 early Friday. Trader reaction to this level should determine the direction of the E-mini Dow.
A sustained move over 28436 will indicate the presence of buyers. This could trigger a surge into the minor Fibonacci level at 28532. Overtaking this level could trigger an acceleration to the upside with the next potential target the main top at 28846.
A sustained move under 28436 will signal the presence of sellers. This could lead to an acceleration to the downside with the next target a support cluster at 28036 – 28025. Taking out 28025 could trigger a steep break into a pair of 50% levels at 27724 and 27627.