DJI darkest times since 2009? (wave analysis)
On Dec 27, 2018 I assumed 2 main alternatives for DJI trend in update to DJIA long term forecast (wave analysis) publication.
On last Friday it became obvious that 2nd alternative is in play. (the most probable outcome)
"2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction." — Dec 27, 2018
Price action overview: Here we have an ABC (red) expanding flat pattern, which forms wave 4 major correction of wave 3 (October 2011 — January 2018 trend).
wave A (red) consists of abc (blue) expanding flat pattern. c = 161.8% of a
wave B (red) consists of abc (blue) zig-zag pattern. c = 61.8% of a
wave B (red) equals 61.8% of wave A (red) in time scale.
Forecast: I consider DJI to drop 29% of its peak value and reach 19463 in late November - early winter. wave C (red) to be 161.8% of wave A (red).
DJI should drop at least to 20423 (38.2% correction of October 2011 — January 2018 price trend)
alternative wave count:
entire structure can be also described as A-B-C-D-E expanding triangle pattern.
wave D = 161.8% of wave B
in this case forecasted price target would be almost the same — 18921. 31% drop.
On last Friday it became obvious that 2nd alternative is in play. (the most probable outcome)
"2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction." — Dec 27, 2018
Price action overview: Here we have an ABC (red) expanding flat pattern, which forms wave 4 major correction of wave 3 (October 2011 — January 2018 trend).
wave A (red) consists of abc (blue) expanding flat pattern. c = 161.8% of a
wave B (red) consists of abc (blue) zig-zag pattern. c = 61.8% of a
wave B (red) equals 61.8% of wave A (red) in time scale.
DJI should drop at least to 20423 (38.2% correction of October 2011 — January 2018 price trend)
alternative wave count:
entire structure can be also described as A-B-C-D-E expanding triangle pattern.
wave D = 161.8% of wave B
in this case forecasted price target would be almost the same — 18921. 31% drop.
Comment:
short-term overview
advice: don't get overexcited with current rebound in stock prices, it may end very soon and be followed by greater sell off.
1st possible level to start sell off has been reached.
as a result, it may be that! the start of big wave down.
break below lower band of median line will confirm the move.
if not, price may cruise to 27060 — 2nd considered level, before anticipated sell off triggers.
1st possible level to start sell off has been reached.
as a result, it may be that! the start of big wave down.
break below lower band of median line will confirm the move.
if not, price may cruise to 27060 — 2nd considered level, before anticipated sell off triggers.
Comment:
DJI tickers which I had used before miss huge chunk of trading data, as a result short-term and intraday tech analysis are heavy skewed.
to overcome this problem I used an other ticker — DJI futures. It includes non-US trading hours data.
SHORT-TERM overview
here we have a forming (a)-(b)-(c) pattern.
wave (c) should complete a 5 wave pattern.
estimated target for wave (c) is 26638.
when wave (c) is completed, a "Big Short" is expected. Really BIG!
27401 is ultimate stop loss for this "Big Short" idea.
to overcome this problem I used an other ticker — DJI futures. It includes non-US trading hours data.
SHORT-TERM overview
here we have a forming (a)-(b)-(c) pattern.
wave (c) should complete a 5 wave pattern.
estimated target for wave (c) is 26638.
when wave (c) is completed, a "Big Short" is expected. Really BIG!
27401 is ultimate stop loss for this "Big Short" idea.
Comment:
here is more precise chart:
Comment:
the daily overview
— sometimes I wonder how accurate my estimates are.
yesterday, I published the short-term update, where I anticipated the final wave 5 (move up) to finish wave (c) to start The Big Short.
the approximate estimation of wave 4 end appeared to be only 4 point higher than actual price and 15 minutes earlier in time.
short-term overview:
as I expected yesterday: DJI is forming wave 5 now.
price should reach 26638 price level.
when such action take place, The Big Short is expected.
advise: you may adjust your trading plan according to this assumption about expected price action.
good luck!
PS: since Friday I fixed only 2.5% profits on DJI short and 0% on DJI long trade, which occurred yesterday.
both trades caught stop loss:
short trade was closed at 26350 (ask price rise stopped at 26370)
long trade was closed at 26034 (bid price dropped to 26004, before it stared surging to 26380)
I could fix 14.5% in profit instead of only 2.5%.
shame. not lucky week for me so far.
— sometimes I wonder how accurate my estimates are.
yesterday, I published the short-term update, where I anticipated the final wave 5 (move up) to finish wave (c) to start The Big Short.
the approximate estimation of wave 4 end appeared to be only 4 point higher than actual price and 15 minutes earlier in time.
as I expected yesterday: DJI is forming wave 5 now.
price should reach 26638 price level.
when such action take place, The Big Short is expected.
good luck!
PS: since Friday I fixed only 2.5% profits on DJI short and 0% on DJI long trade, which occurred yesterday.
both trades caught stop loss:
short trade was closed at 26350 (ask price rise stopped at 26370)
long trade was closed at 26034 (bid price dropped to 26004, before it stared surging to 26380)
I could fix 14.5% in profit instead of only 2.5%.
shame. not lucky week for me so far.
Trade active:
THE BIG SHORT
here we go.
desired target 26638 has been reached. (price hit 26684)
anticipated wave 5 has been formed.
we can assume that wave (c) of (a)-(b)-(c) corrective pattern has been completed.
if our assumption is true, The Big Short is expected.
it's time to look for a SELL SETUPs to catch a Real Big move down.
mid-term sell target to consider: 22854, 24317, 20487.
now I view this (a)-(b)-(c) corrective pattern as a wave 2 of a forming 5 wave structure, which in the end should bring DJI to 19463 — 18921 level.
as a result I consider 22854 as the most likely target for wave 3.
then in ideal scenario it should be corrected by wave 4 and followed by final sell off — wave 5.
Well!
this is my game plan.
trade decision is up to you, comrades.
good luck!
PS: I'm already in at 26656.
here we go.
desired target 26638 has been reached. (price hit 26684)
anticipated wave 5 has been formed.
we can assume that wave (c) of (a)-(b)-(c) corrective pattern has been completed.
if our assumption is true, The Big Short is expected.
mid-term sell target to consider: 22854, 24317, 20487.
now I view this (a)-(b)-(c) corrective pattern as a wave 2 of a forming 5 wave structure, which in the end should bring DJI to 19463 — 18921 level.
as a result I consider 22854 as the most likely target for wave 3.
then in ideal scenario it should be corrected by wave 4 and followed by final sell off — wave 5.
this is my game plan.
trade decision is up to you, comrades.
good luck!
PS: I'm already in at 26656.
Comment:
DJI short-term trend is extremely bullish.
looks like DJI is about to break 27400 level, which is ultimate stop loss for the current Big Short idea.
it may be viewed as great risk/reward opportunity to short DJI / stocks now.
However, if DJI breaks 27400, entire Big Short idea will become invalid.
in this case there are 2 alternatives (updated version of alternatives that were published on 27 December 2018 in update to DJIA long term forecast (wave analysis):
1) bear market is done and we should expect further surge of DJIA price.
2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction.
1) ABC(red) is a complete bear trend, as a result DJI should form a new long-term bull trend lasting approximately 2years.
(a)-(b)-(c) (green) is just a minor running flat correction inside a new bull trend, where (c) is 100% of (a).
2) ABC(red) is not a complete bear trend (correction) structure.
currently wave B (red) is being formed, which is expected to consist of ABC (circled yellow) zig-zag pattern.
wave B(red) is expected to last 100% of the time that wave A(red) lasted.
after wave B(red) is formed, The Big Short (wave C (red)) should be anticipated.
I suppose it's a complete DJI wave analysis by now.
looks like DJI is about to break 27400 level, which is ultimate stop loss for the current Big Short idea.
However, if DJI breaks 27400, entire Big Short idea will become invalid.
in this case there are 2 alternatives (updated version of alternatives that were published on 27 December 2018 in update to DJIA long term forecast (wave analysis):
1) bear market is done and we should expect further surge of DJIA price.
2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction.
1) ABC(red) is a complete bear trend, as a result DJI should form a new long-term bull trend lasting approximately 2years.
(a)-(b)-(c) (green) is just a minor running flat correction inside a new bull trend, where (c) is 100% of (a).
currently wave B (red) is being formed, which is expected to consist of ABC (circled yellow) zig-zag pattern.
wave B(red) is expected to last 100% of the time that wave A(red) lasted.
after wave B(red) is formed, The Big Short (wave C (red)) should be anticipated.
Comment:
DJI short-term overview
1) alternative:
until 27400 is not broken, the bearish view is our priority scenario in mid-term.
it's assumed that price made 1st wave to the downside after completing wave (c) on September 12th; and now wave 2 is forming, which is supposed to consist of a-b-c flat, where waves "a" and "b" has already been formed and wave "c" is in a process of forming.
if this assumption is right, here we have mid-term sell targets: 23541.
2) alternative:
on the other hand this structure may be considered as a bullish flag.
and DJI is preparing for breaking 27400.
1) alternative:
until 27400 is not broken, the bearish view is our priority scenario in mid-term.
it's assumed that price made 1st wave to the downside after completing wave (c) on September 12th; and now wave 2 is forming, which is supposed to consist of a-b-c flat, where waves "a" and "b" has already been formed and wave "c" is in a process of forming.
on the other hand this structure may be considered as a bullish flag.
and DJI is preparing for breaking 27400.
Trade active:
as we see, The Big Short idea is coming true.
main (1) alternative, which was published on Monday, October, 1, has come true.
DJI reversed to the downside after reaching 1st of 2 suggested pivot points: 27074, 27293.
In addition to long-term sell target 19463 and mid-term sell target 23541 we may consider additional short-term sell targets 26110, which is based on wave 1 (yellow) 161.8% extension, and 25518 (261.8% extension) as more aggressive target.
main (1) alternative, which was published on Monday, October, 1, has come true.
DJI reversed to the downside after reaching 1st of 2 suggested pivot points: 27074, 27293.
Trade closed manually:
What if we are looking at running triangle?
wave E = 61.8% of wave C.
after reach this approximate level, DJI energetically bounced back regaining 26000.
Facebook already stopped falling yesterday. the exact same pattern occurred on December, 26.
after reach this approximate level, DJI energetically bounced back regaining 26000.
Facebook already stopped falling yesterday. the exact same pattern occurred on December, 26.
here we have possible price action scenario.
short-term upward correction of bigger downward trend.
general downtrend assumption presumes 27400 NOT to be broken. it's ultimate stop loss for this idea, invalidation criteria.