Technical Analysis

Dow Jones futures (YM) rolls over as sentiment favors tech

  • YM has dropped 5% from its local top made at the beginning of May, and technical analysis indicates that we have further to go.
  • Volume profile indicates less liquidity moving down in price, which could accelerate a sell-off.
  • Pivot points give us potential turning points in the market if price action continues in a bearish fashion.

Technical analysis

YM has rolled over since the most recent local top made at $34,373 from the beginning of May. We have seen a dip of 5% which is not significant, but the price action tells us the bearish momentum may still have further to go.

The 200-day moving average is being tested at the moment, as seen in the chart below. There may be some support off this level as long-term traders begin to enter into long positions.

The main reason I see a higher probability of price moving lower from here is that the volume profile is showing us liquidity is getting thinner the lower we go. Price generally moves quickly through low-volume nodes in the volume profile because there is an insufficient amount of liquidity to support prices. I show the reduced liquidity with the black arrow on the left-hand side of the volume profile.

The pivot points also give us targets to aim for, with the very last one at $31,978. That would require a lot of selling pressure to send the market lower. That could be the last stop before we see a reversal in price, but we need to monitor price action closely if it does, fact approach that level.

YM Daily cahrt showing volume profile, 200 ma and pivot point indicators
YM Daily Chart