December E-mini Dow Jones Industrial Average futures are trading lower shortly before the cash market opening. The market opened lower during the pre-market session and has remained there. Concerns over the OPEC deal to curb production is weighing on the market as well as the weaker dollar.
The tone of the market today is likely to be determined by the major players – mutual funds, institutions and banks. They were out of the market last week due to the U.S. holiday while the major indexes posted new all-time highs. They are either going to chase the market higher or play for a pullback into a value area.
The main trend is up according to the daily swing chart. However, momentum may be shifting to the downside with the formation of the first minor top since November 15. The new minor top is 19148. The minor bottom is 18756. This price is a potential trigger point for an acceleration to the downside.
The short-term range is 18756 to 19148. Its retracement zone at 18952 to 18906 is the next downside target.
The main range is 17418 to 19148. Its retracement zone at 18283 to 18079 is the primary downside target.
Based on the current price at 19087, the direction of the market today is likely to be determined by trader reaction to the steep uptrending angle at 19082.
A sustained move over 19082 will indicate the presence of buyers. This could generate enough upside momentum to challenge the minor top at 19148. A trade through this top could trigger an acceleration to the upside.
A sustained move under 19082 will signal the presence of sellers. This could generate the downside momentum needed to challenge the minor retracement zone at 18952 to 18906. The Fib level at 18906 is the trigger point for a possible break into 18756.
If 18756 fails as support then start preparing for a steep break into 18283 to 18079 over the near-term.
Watch the price action and read the order flow at 19082. Trader reaction to this angle will tell us if the buyers are still coming in to support the market or if the sellers are taking control.