E-mini Dow Tracking Higher Following Monday’s Dramatic Reversal Bottom

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June E-mini Dow Jones Industrial Average futures are edging higher early Tuesday after posting a dramatic reversal to the upside the previous session.

There was no particular reason for the market’s rebound, but some attributed it to profit-taking and position-squaring ahead of the start of the U.S. Federal Reserve’s two-day meeting on Tuesday.

In my opinion, it doesn’t make much sense to take on new positions ahead of the Fed because the meeting carries with it a lot of uncertainty.

At 02:52 GMT, June E-mini Dow Jones Industrial Average futures are trading 33104, up 124 or +0.38%. On Monday, the SPDR Dow Jones Industrial Average ETF settled at 330.84, up 1.15 or +0.35%.

JOLTS Report on Tap

Wall Street is largely expecting interest rates to be raised 50 basis points at the Fed meeting. Some investors believe expectations of aggressive monetary tightening from the central bank are already priced into the markets. If that is the case then we could be looking at a “sell the rumor, buy the fact” situation.

Looking ahead to Tuesday, traders will have the opportunity to react to the latest reading of the Job Openings and Labor Turnover (JOLTS) data at 14:00 GMT. Data on auto sales for April will also be released on Tuesday.

On Monday, U.S. factory activity grew at its slowest pace in more than 1-1/2 years in April amid a rise in workers quitting their jobs, and manufacturers are becoming more anxious about supply over the summer because of China’s zero tolerance COVID-19 policy.

Daily June E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum could shift to the upside if Monday’s closing price reversal bottom is confirmed.

A trade through 33145 will confirm the chart pattern, while a move through 32358 will negate the bottom and signal a resumption of the downtrend. A move through 35413 will change the main trend to up.

The minor trend is also down. A trade through the pair of minor tops at 33968 and 34038 will change the minor trend to up. This will also confirm the shift in momentum.

The nearest resistance zone is 33198 to 33357. The latter is a potential trigger point for an acceleration to the upside with 33750 – 33886 the next target area.

Daily Swing Chart Technical Forecast

Trader reaction to 32752 is likely to determine the direction of the June E-mini Dow Jones Industrial Average on Tuesday.

Bullish Scenario

A sustained move over 35752 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 33198 – 33357.

Since the main trend is down, sellers could come in on the first test of 33198 – 33357. However, overtaking 33357 could trigger an acceleration into 33750 – 33886 over the near-term.

Bearish Scenario

A sustained move under 35751 will signal the presence of sellers. This could generate the momentum needed to challenge yesterday’s low at 32358. Additional support is a pair of main bottoms at 32218 and 32086.

For a look at all of today’s economic events, check out our economic calendar.