DJIA Tests May's 38% Retracement - Forex News by FX Leaders
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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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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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