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E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Close Under 27527 Forms Reversal Top

James Hyerczyk

June E-mini Dow Jones Industrial Average futures are trading lower shortly after the mid-session on Tuesday as investors paused ahead of a Federal Reserve meeting that could offer views on the recent signs of economic recovery that put the benchmark average in a position to turn higher for the year.

At 17:12 GMT, June E-mini Dow Jones Industrial Average futures are trading 27352, down 175 or -0.64%.

While no major policy announcements are expected when the U.S. central bank wraps up its two-day meeting on Wednesday, investors will look for hints that the U.S. central bank believes the worst of the coronavirus crisis has passed, Reuters said.

The benchmark U.S. yield curve – an indicator of economic expansion – has widened to its steepest level since March as U.S. data improved. Investors will also keep an eye on whether the Fed will step into flatten the yield curve. This could actually boost the Dow.

Daily June E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside based on the potentially bearish chart pattern developing late Tuesday.

A rally through the intraday high at 27624 will signal a resumption of the uptrend. The main trend will change to down on a move through 22704. This is highly unlikely, however, there is room for a normal 50% to 61.8% retracement.

The minor trend is also up. The minor trend will change to down when sellers take out the last minor bottom at 24991. This will shift momentum to the downside.

The minor range is 24991 to 27624. Its 50% level at 26308 is the first potential downside target.

The major support zone that is controlling the longer-term direction of the market is 25144 to 23796.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 27352, the direction of the June E-mini Dow Jones Industrial Average the rest of the session is likely to be determined by trader reaction to 27527.

Bearish Scenario

A sustained move under 27527 will indicate the presence of sellers. A close below this level will form a potentially bearish closing price reversal top. If confirmed this could lead to a 2 to 3 day correction into at least 26308.

Bullish Scenario

A sustained move over 27527 will signal the presence of buyers. If this move creates enough upside momentum then we could see an eventual test of the December 31, 2019 close at 28476. Taking out this level will turn the June E-mini Dow Jones Industrial Average futures higher for the year.

For a look at all of today’s economic events, check out our  economic calendar.

This article was originally posted on FX Empire

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