DJIA Tests May’s 38% Retracement

Posted Thursday, May 16, 2019 by
Shain Vernier • 1 min read

It has been a chaotic week on Wall Street, with the U.S. indices trading with extreme volatility. Today has brought a second-straight bullish opening half-hour to the DJIA (+200), S&P 500 (+24), and NASDAQ (+65). At least through the early going, it appears as though trade war fears are subsiding and investors are becoming excited about buying the latest dip in U.S. equities.

DJIA Is Challenging A Key Technical Level

From a technical standpoint, the DJIA DOW, S&P 500 SPX, and NASDAQ are challenging a major area of resistance. The 38% Fibonacci retracement of May’s range is currently in play for all three indices. This is a make-or-break technical area that will determine the validity of the daily downtrend in U.S. stocks.

June E-mini DOW Futures (YM), Daily Chart
June E-mini DOW Futures (YM), Daily Chart

Here are the key levels to watch for the June E-mini DOW throughout today’s session:

  • Resistance(1): 38% Retracement of May’s Range, 25779
  • Resistance(2): Bollinger MP, 26030
  • Resistance(3): Daily SMA, 26479

Bottom Line: At press time, positive sentiment is winning the early-session. The June E-mini DOW is crashing against the 38% Retracement and it looks like a bullish breakout is on the way. If so, a short from the Bollinger MP is a decent way to play the action.

For the remainder of the session, I will have sell orders queued up from 25998. With an initial stop at 26026, this trade produces 25 ticks on a slightly sub-1:1 risk vs reward management plan.

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