DOW Bearish Ascending Triangle Forming Elliott Correction Wave B
Fellow traders, here is my updated idea on what the Dow might be in for, given unfolding patterns- although small Elliott 'microwaves' have appeared in the past week, they are chaotic and unreliable; instead we have what looks like a truncated flat contracting 'B' wave in A-B-C Elliott Wave correction;
An argument can be made for a minor 1-2-3 impulse over past week ending on 7-06 with a small subwave 3; if it really is, then a wave 4 sharp pullback is expected (since wave 2 was so flat, by alternating wave theory any 4th wave will be sharp), possibly back to 24240, but not below wave 1 top, which was quite weak; if we see this, it begs for a 5th wave impulse to retest 245 resistance; estimating possible high of 24680 = Fibo 0.618, unless it also truncates; R2 at 247 will be fiercely tenacious.
I favor the following argument instead, and I fear any rise significantly above 24540 is unlikely, given price action, patterns and the miasmic market milieu:
A bearish ascending triangle is forming now in the pennant at base of Dow flagpole Wave A, colored in chart:
Wave A cut 1400 off index and instead of a robust Wave B to form a right shoulder, as many of us anticipated, we got the pennant- a very bearish formation with strong R at 24500, now tested x4; these are typical continuation patterns for downtrend
The closing Dow price on 7-06 of 24457 is just 10 points under the 0.50 Fibo retrace for the ascending wedge from which it broke down- typically we expect break from asc-wedge to react up to 1/2 wedge height; now it has
(NB: NOT the A wave drop height--> use the wedge height = 25401 - 23531 = -1870, expect 0.50 rise to 23531 + 935 = 24,466!)
When break down from pennant ascending triangle comes, it is expected to typically fall equal to or even greater than the drop down flagpole (=> -1400, expect 23054 or lower is possible)
The rapidly closing triangle suggests that breakdown will arrive on or before 07-13
Wave C of an A-B-C Elliott bearish wave cycle is the strongest and most bearish corrective reaction wave, expect panic selling to begin when S1, reaching back to October 2017, is breached; this could easily drive index under 23K - possibly as low as 21800 at S2 reaching to Aug 2017
Wave D reaction to Wave C is shown as pure hypothetical, as a possible 0.618 Fibo rally to 23931 in August (given C pivot at 23054); what actually happens after C remains to be seen
Wave E may or not materialize, it can be truncated, but if it does appear, it will bear down hard - a real crash (thank the Donald if it breaks under 20K!).
Recovery anticipated as a Elliott 1-2-3-4-5 wave motive impulse to carry index back to the long trendline reaching back to 2010, possibly beginning after mid-term elections in November. Estimates for index shown are purely hypothetical approximations, based on Fibos and possible supports. I do not make predictions, only forecasting possibles based on wave theory, which is sometimes quite erroneous.
Feedback and constructive criticism is always welcome!
Good luck to all of us.
An argument can be made for a minor 1-2-3 impulse over past week ending on 7-06 with a small subwave 3; if it really is, then a wave 4 sharp pullback is expected (since wave 2 was so flat, by alternating wave theory any 4th wave will be sharp), possibly back to 24240, but not below wave 1 top, which was quite weak; if we see this, it begs for a 5th wave impulse to retest 245 resistance; estimating possible high of 24680 = Fibo 0.618, unless it also truncates; R2 at 247 will be fiercely tenacious.
I favor the following argument instead, and I fear any rise significantly above 24540 is unlikely, given price action, patterns and the miasmic market milieu:
A bearish ascending triangle is forming now in the pennant at base of Dow flagpole Wave A, colored in chart:
Wave A cut 1400 off index and instead of a robust Wave B to form a right shoulder, as many of us anticipated, we got the pennant- a very bearish formation with strong R at 24500, now tested x4; these are typical continuation patterns for downtrend
The closing Dow price on 7-06 of 24457 is just 10 points under the 0.50 Fibo retrace for the ascending wedge from which it broke down- typically we expect break from asc-wedge to react up to 1/2 wedge height; now it has
(NB: NOT the A wave drop height--> use the wedge height = 25401 - 23531 = -1870, expect 0.50 rise to 23531 + 935 = 24,466!)
When break down from pennant ascending triangle comes, it is expected to typically fall equal to or even greater than the drop down flagpole (=> -1400, expect 23054 or lower is possible)
The rapidly closing triangle suggests that breakdown will arrive on or before 07-13
Wave C of an A-B-C Elliott bearish wave cycle is the strongest and most bearish corrective reaction wave, expect panic selling to begin when S1, reaching back to October 2017, is breached; this could easily drive index under 23K - possibly as low as 21800 at S2 reaching to Aug 2017
Wave D reaction to Wave C is shown as pure hypothetical, as a possible 0.618 Fibo rally to 23931 in August (given C pivot at 23054); what actually happens after C remains to be seen
Wave E may or not materialize, it can be truncated, but if it does appear, it will bear down hard - a real crash (thank the Donald if it breaks under 20K!).
Recovery anticipated as a Elliott 1-2-3-4-5 wave motive impulse to carry index back to the long trendline reaching back to 2010, possibly beginning after mid-term elections in November. Estimates for index shown are purely hypothetical approximations, based on Fibos and possible supports. I do not make predictions, only forecasting possibles based on wave theory, which is sometimes quite erroneous.
Feedback and constructive criticism is always welcome!
Good luck to all of us.
Trade active:
Looks like an upside breakout from the triangular box ongoing; wanted to see after Friday whether it would pullback but opening appears stronger in futures and Asian markets up nearly 2% so anxiety over trade has calmed for the time being. Fibo .618 reaction can carry index to 247 and 24880 is certainly possible, it reaches back to top of Wave 1 in wedge. Anything north of 249 will encounter strong resistance. Look for the topping action and get a good entry to short Wave C. More as we get it.
