📈 Current Market Structure and Key Levels
The E-mini Dow Jones (YM) futures recently reached an All-Time High near the 44,000 mark before facing a mild correction of 4%. This pullback phase has brought prices back toward some key zones that might offer high-probability entry points for bullish trades. Let’s break down these zones and the broader trend while still keeping in mind the upcoming US elections, which will have a serious impact on volatility.
🔍 First Pullback Zone (42,000 – 42,500) 🔍
The First Pullback Zone, marked at 41,600, aligns with a previous area of consolidation and support. This area also intersects with the 100-day Simple Moving Average (SMA). This level was first resistance at the previous all-time high, but the price pushed through it on September 18th and is now testing it as support. Given the trendline’s support from March 2024, this zone looks particularly attractive for long positions if price action stabilizes and shows bullish reversal patterns.
Probable Scenario:
- High Probability of Support: This zone could hold firm as buyers defend the SMA and prior structure support.
- Entry Considerations: Look for bullish candlestick patterns (e.g., hammer, engulfing) or a bounce signal off the 100-day SMA to validate a potential entry.
🐂📈Bullish Target: A move back towards the 43,500 – 44,000 range, revisiting recent highs if bullish momentum returns.
📊 Second Pullback Zone (39,500 – 40,500) 📊
The Second Pullback Zone around 39,500 to 40,500 is a larger support zone that has been a level of high demand for YM futures. If the current pullback extends further, this zone may become a crucial secondary support level. Positioned just below the rising trendline and the prior consolidation area, this area could act as a “last line of defense” for bulls in the medium term.
Probable Scenario:
- High Confidence as Major Support: This zone offers a higher degree of reliability for long trades given its role as a major previous accumulation area.
- Entry Considerations: Look for a significant uptick in volume or a MACD bullish crossover if prices reach this level, as this would add to the bullish case.
🐂📈Bullish Target: An initial rebound toward the 42,000 mark, followed by a potential medium-term push to the 44,000 area if market sentiment remains positive.
🕵️ Technical Indicators: MACD & Moving Averages 🕵️
- MACD: The MACD line is currently below the signal line, indicating a bearish phase. However, momentum has been showing some potential for a reversal with the recent flattening. A bullish MACD crossover in either pullback zone could serve as a compelling buy signal.
- 50-Day SMA: Acting as a dynamic support in the First Pullback Zone, the 50-day SMA’s alignment with the trendline adds to the case for a potential bounce here.
Upcoming U.S. Election Impact
With the U.S. presidential election approaching, increased volatility is expected in the stock market. Historically, election uncertainty can lead to short-term corrections but often sees a recovery as policy directions become clearer.
Possible Impact:
- Election Uncertainty: Markets may continue to exhibit short-term volatility. This could result in a test of both pullback zones, providing entry opportunities at a lower level.
- Medium- to Long-Term Stability: If market-friendly policies are anticipated or implemented, we could see stronger support in the pullback zones, bolstering the case for long positions in these areas.
🔮 Summary & Trade Outlook 🔮
- Short Term (Days): Monitor the First Pullback Zone around 42,000 – 42,500 for a bullish reversal. Look for confirmation via candlestick patterns or MACD signals.
- Medium Term (Weeks): If volatility pushes prices lower, the Second Pullback Zone (39,500 – 40,500) offers a high-probability long entry area with a potential for a more robust rebound.
- Long Term (Months): The uptrend remains intact, supported by the trendline from March 2024. A return to all-time highs remains a reasonable target, particularly if post-election sentiment is positive.
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