E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Strong Over 28371, Weak Under 28040

December E-mini Dow Jones Industrial Average futures finished lower on Friday after giving up early gains. The market confirmed the previous session’s potentially bullish closing price reversal bottom, but the buying was too light to extend the rally.

Volume was subdued throughout the session with investors keeping a close eye on negotiations on a U.S. stimulus package that would ease the economic shock caused by the coronavirus pandemic.

On Friday, December E-mini Dow Jones Industrial Average futures settled at 28189, down 79 or -0.28%.

White House Advisor Larry Kudlow also chimed in on Friday, saying it would be difficult to get the stimulus bill passed before the election. Nonetheless, the market believes a stimulus deal is going to get done:  The only question would be size and timing, analysts said.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 28846 will signal a resumption of the uptrend. The main trend will change to down on a move through 26407. This is highly unlikely, but there is room for a normal 50% to 61.8% correction of the rally from September 24.

The minor trend is down. This is controlling the momentum. A new minor bottom was formed at 27896. Taking out this level will indicate the downside momentum is getting stronger. The minor trend will change to up on a move through 28732.

The intermediate range is 29050 to 26407. Its retracement zone at 28040 to 27729 is support. This zone stopped the selling at 27896 on Thursday. The zone is also controlling the near-term direction of the Dow.

The short-term range is 26407 to 28846. Its retracement zone at 27627 to 27339 is another potential downside target and support area.

The minor range is 28846 to 27896. Its 50% level or pivot at 28371 is the last potential resistance before the 28846 main top. This level stopped the buying on Friday.

Short-Term Outlook

The recent price action suggests the market could strengthen above 28371, but that move is only likely if investors are willing to continue to bet on a stimulus deal. Furthermore, they are going to have to be willing to accept the risks of taking on bigger positions ahead of the November 3 presidential election.

A sustained move under 28371 will signal the presence of sellers. It could also be a signal that the buying is lightening up.

A trade through 28040 will indicate the selling is getting stronger. This could trigger a further break into the minor bottom at 27896, followed by a pair of 50% levels at 27729 and 27627.