March E-mini Dow Jones Industrial Average futures surged on Tuesday as fears of a heavy economic impact from the coronavirus epidemic tapered off after China’s central bank intervened for the second day.
According to Reuters, China injected 1.7 trillion yuan ($242.74 billion) via reverse repos on Monday and Tuesday, helping Chinese stocks reverse some losses and lifting the world equity index.
At 21:03 GMT, March E-mini Dow Jones Industrial Average futures are trading 28770, up 409 or +1.45%.
The stimulus boosted investor sentiment even as several economists cut forecasts for 2020 global growth as the fast-spreading virus hampers business operations in the world’s second largest economy.
“If China is doing what it needs to contain the worst-case scenario from a financial perspective, then maybe the weakness we saw last week was a little overdone,” said Willie Delwiche, investment strategist at Baird.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 28888 will change the main trend to up. A move through 28105 will signal a resumption of the downtrend.
The intermediate range is 27297 to 29362. Its retracement zone at 28330 to 28086 is support. This zone stopped the selling on January 31 at 28105.
The short-term range is 29362 to 28105. Its retracement zone at 28734 to 28882 is currently being tested. Trader reaction to this zone will determine the near-term direction of the index.
Based on the early price action and the current price at 28770, the direction of the March E-mini Dow Jones Industrial Average into the close on Tuesday is likely to be determined by trader reaction to the 50% level at 28734 and the Fibonacci level at 28882.
A sustained move over 28882 will indicate the presence of buyers. Taking out 28888 will change the main trend to up. This could trigger a rally into a downtrending Gann angle at 29010.
Look for sellers on the first test of 29010. Taking out this angle could trigger a rally into the next downtrending Gann angle at 29186. This is the last potential resistance angle before the 29362 main top.
A sustained move under the 50% level at 28734 will signal the presence of sellers. The first target is a downtrending Gann angle at 28658.
Crossing to the weak side of the downtrending Gann angle at 28658 will indicate the selling is getting stronger. This could trigger a break into an uptrending Gann angle at 28398 and a 50% level at 28330.
This article was originally posted on FX Empire