Convenience Yield and Backwardation
Technical Analysis

Gap filled, bulls unleashed in the Dow Jones futures (YM)

  • Analysis Review: Analyzing the bullish reversal after the gao was filled from last week.
  • Technical Indicators: Moving averages show the 50 MA above the 100 MA, indicating a positive trend.
  • Bullish Outlook: Bulls target the all-time-high above $37,000, taking advantage of a weaker Dollar due to a less aggressive monetary policy approach by the Federal Reserve.

Techncial recap

Take a moment to review the analysis from June 12th here. The gap we analyzed has been filled perfectly, and an immediate bullish reversal followed. Now, bulls are pushing price up above the horizontal resistance line and attempting to break above the ascending triangle once more. 

Technical analysis

Moving Averages: The 50 MA is sitting firmly above the 100 MA after crossing below it and then back above it.

Volume: The volume is slightly picking up, and bulls want to see it spike above the average as it breaks out of the ascending triangle.

Bulls are still targeting the all-time-high above $37,000 as the Dollar weakens through a less aggressive monetary policy approach from the Federal Reserve.

Daily chart YM showing fib retracements, wyckoff volume and 50 and 100 moving averages

Ending off

Keep in mind that in order for the ascending triangle to confirm, we still need to see price break above $34,906 with power. There is not much of a case for bears unless they are willing to make a pure risk-reward ratio play by selling into this resistance, hoping it will fall. This is an unlikely outcome because there is a clear higher demand for YM at the moment. This can be seen by the higher lows on the daily chart stretching back from September.