Monday, May 23, 2022

Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Double Top


Sometimes the markets telegraph a key level or future target level in pre-market or post-market trading. Other times these telegraphed price targets happen during regular trading hours. Recently, the Dow Jones E-Mini Futures Contracts (YM) generated two unique high price levels near $30,000 over the span of about six trading days.

My research team and I believe this “telegraphed high price target level” is a warning of major resistance for traders. These types of broad market patterns are not very common on charts. They happen sometimes, but very rarely like this example on the YM chart below. This Double Top (Tweezers) pattern may be warning that the $30,000 level on the YM could become a major market peak/turning point. Additionally, the post-election rally reached this $30,000 level on the day Pfizer (NYSE:) announced the vaccine data, then sold off quite consistently throughout the regular trading session.

Tweezer Tops Near $30,000 Warn Of Strong Resistance

Obviously, traders are attempting to redeploy capital into sectors they believe present real opportunities for growth and appreciation.  As we can see from the chart below, the Dow Jones and Mid-Cap sectors appear to be the leading sectors at the moment. We’re not calling for a major top in the market based on this pattern (yet).  We are just bringing it to your attention so you can be aware of the resistance level that appears to have setup near $30,000 on the YM.

The market could blow through this $30,000 level and continue to rally higher or it could stall near the $30,000 level and retrace lower. Given the situation with the U.S. election and the surging COVID-19 cases throughout the world, it doesn’t take much of an imagination to consider another shutdown related market decline setting up.

If you read our recent article about the U.S. stock market and gold price appreciation/depreciation phases, you will see how my team believes the U.S. stock market entered a depreciation phase in mid-2018 and the current rally in the markets (2019 till now) is an excess phase “blow off” rally in the works. If our research is correct, we expect the excess phase to end at some point in the near future, setting up a broad market correction and/or broad sideways rotation. In the meantime, the rally appears to continue with a near-term target of $30,000 (only 250 points away). 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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