Dow Double Top Signal: at or near pivot in reaction wave
Updated
Bestimate projection for Dow going into August, tied with October for weakest month of the year.
Coming off a strong rally in July, odds favor more volatility.
Dow appears to be in a corrective, reactionary wave cycle: 'A' wave from first top 07/26 ran down to the flash crash Thursday 08/02 (Label 'W' of WXY reaction).
Notice labels for larger primary trend are ABCDE, so I used WXY for the reaction and 12345 for the minor wave cycles.
B wave of surprising strength carried index up to the 0.786 Fibonacci retrace (label 'X'). A complete 5 wave impulse in this reaction wave is apparent (labeled; 2-hr chart).
Dow banged on ceiling at 25500+ but pushed back, expect at least one retest. To continue the 3rd primary wave from here would require advance to higher high of > 25650 to meet top of rising channel; if index fails to retest channel, then this second high becomes part of a reactionary wave, rather than an actionary continuation of the primary.
Expect C wave (Labeled 'Y') to be shallow (Elliott alternating principle); bullish exuberance returns to the markets, buying the dips is back in fashion.
A .382 retrace would carry back to 24982; a 0.50 to 24794. A 0.618 to 24606 is quite possible, if anxiety returns to world markets.
Time frame for wave C: 5-10 sessions.
Very nice analysis at this link presenting two alternate ending plots:
scienceinvesting.com/technical_analysis/equities/dow-industrials/
Comments are welcome; Good luck traders!
Coming off a strong rally in July, odds favor more volatility.
Dow appears to be in a corrective, reactionary wave cycle: 'A' wave from first top 07/26 ran down to the flash crash Thursday 08/02 (Label 'W' of WXY reaction).
Notice labels for larger primary trend are ABCDE, so I used WXY for the reaction and 12345 for the minor wave cycles.
B wave of surprising strength carried index up to the 0.786 Fibonacci retrace (label 'X'). A complete 5 wave impulse in this reaction wave is apparent (labeled; 2-hr chart).
Dow banged on ceiling at 25500+ but pushed back, expect at least one retest. To continue the 3rd primary wave from here would require advance to higher high of > 25650 to meet top of rising channel; if index fails to retest channel, then this second high becomes part of a reactionary wave, rather than an actionary continuation of the primary.
Expect C wave (Labeled 'Y') to be shallow (Elliott alternating principle); bullish exuberance returns to the markets, buying the dips is back in fashion.
A .382 retrace would carry back to 24982; a 0.50 to 24794. A 0.618 to 24606 is quite possible, if anxiety returns to world markets.
Time frame for wave C: 5-10 sessions.
Very nice analysis at this link presenting two alternate ending plots:
scienceinvesting.com/technical_analysis/equities/dow-industrials/
Comments are welcome; Good luck traders!
Note
So it went to the trendline after all on an exhaustion gap up. Won't be long now...Trade active
Started entering short positions 8/8. Maybe still early but we never eliminate all risk, eh? Looks like 25685 might have been the pivot on Dow and the high at 2863 on Sand P within 10 points of Jan ATH is likely a short-term pivot. We had bearish engulfing in two-hour candles 8/8 signaling possible break in top. Good luck!
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