June E-mini Dow Jones Industrial Average futures are sitting on their highs of the session on Tuesday shortly after the cash market close. The rally is being driven by aggressive counter-trend buying following a three-year low the previous session. One catalyst behind the rally is the hope that U.S. lawmakers were inching closer to an agreement on a stimulus bill to rescue the economy from the damage caused by the coronavirus.
The base of the rally was formed on Monday after the U.S. Federal Reserve said it would embark on an open-ended asset purchase program. The central bank said the program will run in the ‘amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”
At 20:20 GMT, June E-mini Dow Jones Industrial Average futures are trading 20590, up 2093 or +11.32%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 18086 will signal a resumption of the downtrend.
The main trend will change to up on a move through 26962. This is highly unlikely, but there is room to the upside for a 50% to 61.8% retracement.
The minor trend is down. A trade through 20882 will change the minor trend to up. This will also shift momentum to the upside.
The minor range is 20882 to 18086. Its pivot price at 19484 controlled the direction of the Dow on Tuesday. Consider it support.
The short-term range is 26962 to 18086. Its retracement zone at 22524 to 23571 is the primary upside target.
We’re looking for the June E-mini Dow Jones Industrial Average to surge on a breakout over the minor top at 20882. This should trigger a minimum rally into the short-term retracement zone at 22524 to 23571.
The direction of the next major move will then be determined by trader reaction to 22524 to 23571.
If the rally is met by aggressive short-sellers then look for a secondary lower top to form and for the downtrend to eventually resume.
If the rally is strong enough to take out the Fibonacci level at 23571 then look for an extension of the move into the nearest main top at 26962.
This article was originally posted on FX Empire
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