E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Big Challenge for Bulls at 33431 – 34655

December E-mini Dow Jones Industrial Average futures bounced back from recent losses on Wednesday and are now poised to complete their best day in two months as concerns over a default by China’s Evergrande eased.

The blue chip average was also supported by the news that the U.S. House of Representatives passed a bill Tuesday that would temporarily fund the government and suspend the debt limit.

At 20:40 GMT, December E-mini Dow Jones Industrial Average futures are trading 34152, up 354 or +1.05%.

In other news, the Dow held on to its gains late in the session on Wednesday after the U.S. Federal Reserve kept benchmark interest rates anchored near zero. Investors weren’t rattled either when Federal Open Market Committee (FOMC) members indicated they expect to begin reducing monthly asset purchases “soon,” but did not say when.

In his press conference, Federal Reserve Chairman Jerome Powell summarized the days’ events by saying, “While no decisions were made, participants generally viewed that so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate,” he said.

Daily December E-mini Dow Jones Industrial Average

Daily December E-mini Dow Jones Industrial Average

Daily December E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 33478 will signal a resumption of the downtrend. A move through 35383 will change the main trend to up. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement of its recent sell-off.

The main range is 32835 to 35429. The E-mini Dow has been straddling its retracement zone at 34132 to 33826 for three days in an effort to form a support base.

The minor range is also down. A trade through 34826 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 35383 to 33478. Its retracement zone at 34431 to 34655 is the primary upside target.

Short-Term Outlook

Our short-term analysis suggests the December E-mini Dow could develop a counter-trend upside bias as long at 34132 to 33826 holds as support. The primarily upside target is 34431 to 34655.

Trader reaction to 34431 to 34655 will be very important in determining the near-term direction of the E-mini Dow.

Since the main trend is down, sellers are going to come in to defend the trend on a test of 34431 to 34655. They are going to try to produce a potentially bearish secondary lower top. If successful, we should see a retest of 34132 to 33826.

If 33826 fails a second time this week then look for a potential acceleration to the downside with 32835 the next target this time.

If buyers can overcome 34655 with conviction then look for a potential acceleration to the upside with possible stops at 34826 and 35076 along the way.

Essentially, trader reaction to 33431 to 34655 will set the tone into at least Friday’s close.

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

This article was originally posted on FX Empire