The mini Dow Futures appear to be coiling ahead of the next phase of expansion. These are the key levels to watch.
Watch 16240 to 16445
The early range to watch for directional bias in the mini Dow futures [CBOT: YMM14] spans from LVN to LVN on the composite volume profile from 16240 to 16445. Expansion outside of this range will not only give us great short term directional bias, but it will also help us with longer term expansion projections, as well.
Additionally, keep an eye on the composite Volume Point of Control (VPOC) at 16294. VPOC is the price with the highest amount of volume traded, and is therefore considered fair value. So far, the market has been bid below this price the last two sessions, which is bullish for now. If price remains bid at or below this level, it would imply upside expansion ahead.
Otherwise, if the market goes offered through value at 16294, this could be the first significant indication that the market is rejecting current value, which would in turn lead to a price discovery phase to the downside.
Upside Bias Remains Intact
The mini Dow futures have remained bullish after price was rejected off the 15208 level in early February. The bounce occurred after the futures opened the year with a sell-off from the 16472 high on the last trading session of 2013, and so far price has held above the midpoint of this range at 15840. These three points create a triangle that helps us forecast two key expansion targets above — one at 17104 (primary) and the other at 17736 (secondary).
The Dow has traded within this price range for four months, so it could take up to four months for price to fulfill both targets once expansion from the range occurs through 16574.
Short term, watch the 16445 LVN for early signs of strength. Acceptance above this level will imply further strength toward the 50% expansion target of the April price range at 16921 (primary),and the 100% expansion target at 17,268 (secondary).
Watch 16240 For Signs of Weakness
Watch the 16240 LVN for early signs of weakness in the YM. If price goes offered through this LVN, and falls below the April midpoint of 16227, we could see further weakness toward the 15880 April lows. A test of this level offers a swing buying opportunity.
Failure to hold above the 15840 midpoint of the larger price range would imply weakness into the 15,545 LVN and the bottom of the range at 15208.