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DOW Bearish Ascending Triangle Forming Elliott Correction Wave B

DJCFD:DJI   Dow Jones Industrial Average Index
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.
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.

Comments

The volume is not impressive on the last trading day. Small increase/decrease on stocks with large volume, others were weak volume. It seems they trying to sell at the good price.
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@serepok, Yeah selling into the rallies but they ran it up real nice before the break!
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