The DOW Is Approaching A Key Technical Level

In a live market update from last week, we broke down the importance of the 25,000 level for the Dow Jones Industrial Average (DJIA). Early February was dominated by the bears, shattering this level as downside support. Since February 9, it has been a completely different story.

The last three sessions have shown the confidence in stocks that has defined the “Trump Rally.” Price has broken above 25,000 with a vengeance, shattering several areas of topside resistance along the way. A quick look at the daily chart illustrates the extent of bullish participation over the past three weeks.

E-Mini Dow Technicals

It has been a muted open on Wall Street today, with both the DJIA and the S&P 500 near flat. The action is in response to new FED Chair Jerome Powell’s commentary addressing a coming series of gradual rate hikes.

At press time, March E-mini DOW futures are trading just above yesterday’s high and closing in on a key topside resistance level. Here is the technical roadmap for today’s U.S. session:

• Resistance(1): Macro 78% Retracement, 25893
• Support(1): 20 Day EMA,
• Support(2): Bollinger MP,  25132
• Support(3): Psyche Level, 25000

Bottom Line: The 78% retracement of 25893 is a huge level for this market. In the event that it does not hold, we will see a test of all-time highs at 26684. In addition, buyers are likely to be laying in the weeds near the support levels. On a pullback, I expect traders to be going long above 25,000.

For the near-term, rotation between 26,000 and 25,000 is probable. A short position in the March E-mini DOW from 25889 with an initial stop at 25901 is a solid scalp worth 10-15 ticks.