Dow is in an extended wave 5, approaching the upper edge of a symmetric triangle. a weakening formation forming over past 9 days, albeit on low . Breakout from this channel is unlikely during the current wave impulse, with high resistance, low daily but should it occur could ignite a recovery wave;
Although this 5th impulse wave has exceeded my wave model's forecast expectation of 25076, it is progressively weakening (plateau formation)) and either at or very near a short-term top, with strong resistance above 25240.
theory projects possible extensions of Wave 5 based on height of wave 1+3, measured up from bottom of 4th wave; this estimation shown on chart in color grid yields possible high of 25238 at Fibo .618 for this wave impulse, likely occurring this week between 18-20 July (Wave 5 top). NB: Wave 5 closed Tues at 0.50 Fibo for the impulse- and reached 25155 intraday within target shell, for a possible near-term top;
Market is ripe for a pullback soon and anything could start a tumble, however in looking at the price action, impulsive waveforms, and considering solid fundamentals and decent , a distinct possibility of only a modest 0.618 Fibo pullback to a possible wave C low at strong support of 24474 seems more likely than another deep cut, but should it break through support at 23800 will likely hold.
Look back at April/May waves shows this pattern of a modest pullback from 5/22 -5/29, with a wave low ending near .618 retrace on 5/29 (Wave A); the shallow pullback was followed by the strong June impulse that carried index to 25400.
By theorem of alternating behavior of waves, we had a sharp, deep wave in June following May's short, shallow pullback; so, next week in July may present a similar short, shallow pullback to near strong support at 24620, the 0.50 Fibo retracement, if index holds within shell bottom look for 24474 floor.
Notably, B Waves have shown an expanded pattern - rising higher after each correction in channel as market chugs toward recovery. Given good economic outlook the correction may end in August after churning for six months with recovery going into the US midterm elections.
It might be prudent to use any significant pullback to cover shorts and position for longs. If the alternating pattern holds and the symmetric triangle resolves in manner, sidelined cash will pour into the market in August and drive it towards recovery. August often is a month, reversing prior year's trend. Fibo grid suggests possible high in August of 25760, if impulse resolves in uptrend and leads to correction recovery.
Expect upside breakout from symm-triangle after a shallow 05 -.618 Fibo retrace to support between 245 - 247 range. Could break lower to S3 at 23800, seems like a recovery is forming however. Always look for reversal confirmation before entering trades else you're just guessing (usually wrong!)
Pulldown may be subject to possible bull trap test of triangle top trendline; former support becoming resistance around 25127 at 0.50 Fibo (although we saw this Friday).
Symmetric triangles are tricky beasts and can go longer than you expect but we're close to the apex and I suspect a strong breakout topside may come in August.
SPX has shown a well-defined rising channel and pullback there might be less, possibly ~2746, give or take a little. The bull wave coming off lows for SPX & NDX will be stronger than Dow.
(base is 2050 height entry 25400 > 27450. Look for SPX > 3050 same principle, possibly breaking out in August after this down wave C).
An ascending triangle's price target is generally equal to the entry price plus the vertical height of the triangle.
Read more: Ascending Triangle https://www.investopedia.com/terms/a/ascendingtriangle.asp#ixzz5LkwyavjN
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We could get a small popup Friday but I wouldn't bet on it. Might move sideways a few days before going south, IDK. A shooting star would be diagnostic.
Looks like global selloff cascade likely. Expect wave C to carry at least to target shell but possibly as low as 24266 @Fibo 0.786 if it gets panicky.
Downdraft takes 10-12 sessions to complete, just short and hold for 2 weeks, expect possible rally attempts; day trading these down trends is really tough- good luck!