Dow Jones Preparing a Big Bearish Wedge
Updated
Yesterday i posted the bearish wedge on the left, the smaller one, thinking it could drop and then move up again. We did exactly that, but the move up has been a bit slow for my taste, so now i am thinking we might be in the making of an even bigger wedge (the yellow triangle).
For this to play out, we have to make a lower high now, actually even means that the high should be set already. I expect US to move again AFTER Europe closes in half an hour from now. So as long as we stay below 26650/600, this idea stays valid.
If this plays out, we should see a drop below yesterday's low, thinking around 25.500. If we find support there, we could be headed towards the 27300/700 zone. Only to make a new high there and then make another huge dump. Maybe 2000 points, maybe 6000 points, that i can't say.
Some of the updates i posted yesterday:
Was hoping Dow would come back to current prices, maybe even 27500, since FED just cut the interest rate with 0.5%, spiking you prices a bit. Thinking they can fight the virus with intrest (LOL).
For me it’s simple now, as long as we do not see a the virus calming down, and continuing to spread, closing down businesses, markets will drop. Trump and his friends will do everything to prevent a market dump, but as long as the problem increases, people will simply sell into each rally we get. So I don’t believe they will be able to hold it.
Now normally, each wave happens in at least 3 waves. So the big dump was a single wave, meaning we should see another wave at some point. I think it’s worth the risk, to take on a short between 27000/500 with a very wide stop, think I will even use 1000/1500 points. It could potentially be an entry for a big move, maybe even below 20.000 if economies continue to find troubles because of this virus.
About eurusd, looking great. With this intrest cut the FED did, will put even more pressure on the Dollar. So maybe we get a correction on eurusd, but I think that a very big chance that THE low was set last week when I told you guys to hedge, that we will likely see it continue to rally this year.
Even Dow is glued to my line :) . Anyway, still dropping, now comes the difficult part. This idea is actually to patiently wait for a bounce in this zone, rally above today’s high, see it slow down and then short it. Going long here is risky, fed rate cut news today was short lived and got sold (as expected, xxxxxx thinking it will work ). At the moment looks like a bear flag or bottom formation. Think if we see one more dump, fast one, like towards 25500ish, could be a stop hunt and then the potential low. But again, long is very risky in this market, safer plays is shorting the highs
For this to play out, we have to make a lower high now, actually even means that the high should be set already. I expect US to move again AFTER Europe closes in half an hour from now. So as long as we stay below 26650/600, this idea stays valid.
If this plays out, we should see a drop below yesterday's low, thinking around 25.500. If we find support there, we could be headed towards the 27300/700 zone. Only to make a new high there and then make another huge dump. Maybe 2000 points, maybe 6000 points, that i can't say.
Some of the updates i posted yesterday:
Was hoping Dow would come back to current prices, maybe even 27500, since FED just cut the interest rate with 0.5%, spiking you prices a bit. Thinking they can fight the virus with intrest (LOL).
For me it’s simple now, as long as we do not see a the virus calming down, and continuing to spread, closing down businesses, markets will drop. Trump and his friends will do everything to prevent a market dump, but as long as the problem increases, people will simply sell into each rally we get. So I don’t believe they will be able to hold it.
Now normally, each wave happens in at least 3 waves. So the big dump was a single wave, meaning we should see another wave at some point. I think it’s worth the risk, to take on a short between 27000/500 with a very wide stop, think I will even use 1000/1500 points. It could potentially be an entry for a big move, maybe even below 20.000 if economies continue to find troubles because of this virus.
About eurusd, looking great. With this intrest cut the FED did, will put even more pressure on the Dollar. So maybe we get a correction on eurusd, but I think that a very big chance that THE low was set last week when I told you guys to hedge, that we will likely see it continue to rally this year.
Even Dow is glued to my line :) . Anyway, still dropping, now comes the difficult part. This idea is actually to patiently wait for a bounce in this zone, rally above today’s high, see it slow down and then short it. Going long here is risky, fed rate cut news today was short lived and got sold (as expected, xxxxxx thinking it will work ). At the moment looks like a bear flag or bottom formation. Think if we see one more dump, fast one, like towards 25500ish, could be a stop hunt and then the potential low. But again, long is very risky in this market, safer plays is shorting the highs
Note
Well it seems my original idea i posted in my channel (the smaller wedge, between the black lines) was the perfect scenario. it did not reach the upside of the 27000/500, with a high of 27100. US markets closed at the high yesterday, but have since been dropping. This almost confirms that yesterday's move, after Europe closed, was purely a short squeeze. So big players in the market were holding the price between 26350/500 to eventually just push price up. Otherwise we would not have been dropping this much again after closing at the high. Now we are at the low of the wedge again, so normally we should see it break later today. There is room for a move up, but think a max of 26750, maybe 26800 before turning down again. Target of the wedge is around 25000/500
Note
The target zone i gave a 25000/500, has been reached,. Just went slightly below 25300. In theory, the target is around 25000/750, but i sometimes prefer to take things on the safe side, especially with the markets being VERY important in politics nowadays, so i do think that when markets can be manipulated, they will do it. So, everyone can do what they want of course. I do think that as long as things continue to get worse with the virus, we will drop MUCH more coming months. But doesn't mean it goes in a straight line. So i think, just think about what you want to do.
Take partial profit, simply just sit on it for weeks/months or take 100% profit. There is no bad play, but i do think keeping at least a small part is the best play here.
Note
I have seen several attempts to pump past few hours, everyone got sold hard, which is of course a bearish sign. But we are in that range, support zone from last weeks low, which got defended VERY hard (yellow zone). Was also Friday (as if they also want to defend sentiment over the weekend maybe). So i think there is a chance a low might be set here, at least temp. Don't ask me how high it can go. Could be just as small as 25600/800, could bring it above 27k again. Think it's easy to say, that 25200ish is the level they are defending now. So as long as it stays above that level, we could go up. Would keep an eye on Gold and EUR/USD as well, they are correlated a lot these days.Note
There is the bounce, went fast. Some resistance at 25700ish, but think a key level is around 25900. If that one breaks, this correction could get extended Note
New Dow analysis:
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.