DaddySawbucks
Long

Dow Fan Principle: Buy on third channel breakout; test coming!

DJ:DJI   Dow Jones Industrial Average Index
Dow has charted a hammer spike candle formation with massive reaction after. Hope you got to play that round from earlier posts!

Now comes critical test time- breakout or fakeout? Failure to break channel upper trendline will lead to a precipitous decline- panic selling.

Gann fan shows of the prior breakout attempts from the flag channel, in April/May and June, turned back at 2/1 and 3/1 resistance zones.

Now index has charted a powerful bullish wave through the 4/1 zone and found strong support at nearly exactly Fibo 0.382 and leaped back into action- 8/1 final test this week, sure hope we get good grades!

Will it break out to upside or be pushed back into channel? Elliott wave analysis strongly suggests we have a (3) of (5) wave forming now which might have the power to carry index to ~26492 (see estimate derivation in prior post).

Technically, this is a Bear Flag formation and a likely outcome could be to break down from resistance at upper channel trendline:
https://speedtrader.com/how-to-trade-flag-patterns/

However it may still resolve to upside and the bullish impulse may be strong enough to breakout, if it does, as this is the third breakout, I'll buy into it!
https://tradingsim.com/blog/fan-principle/

https://tradingsim.com/wp-content/uploads/2011/06/fan-principle-example.png

I have examined the chart within channel and do not find a Gartley relationship in the past six weeks' trading pattern; the cup-and-handle pattern is evident, however.

As always, this is not investment advice and all comments are only intended for education and amusement. Good luck!
Order cancelled: My discovery of a Bearish Gartley formation leads me to cancel this idea, as appealing as it may seem, expect strong R3 at 25873 and look for bearish chart signals (risingwedge, headandshoulders) as index approaches trendline retest.

See:
Extremely well done chart, and presentation on the Dow.

You are raising the bar on technical evaluation of current condition,
with the next destination, and path of least resistance compellingly presented.

You are making me think twice,... something few have caused me to do in the past.


THE_UNWIND



Reply
@The_Unwind, Thanks very much! I sure hope my longs ain't wrongs. Bought 100 DIA Sep calls on Friday, will be some sleepless nailbiting nights watching futures. Good luck!
Reply
The_Unwind DaddySawbucks
@DaddySawbucks,

Have you ever considered purchasing Leveraged ETF's on the Dow instead of Options when trading market direction ?


I use SDOW Pro Shares 3 X Short Dow ETF, and UDOW Pro Shares 3 X Long Dow ETF,
when I wish to speculate on the direction of the Dow.
They are leveraged at 3 X the Index ( DJI ), and you do not suffer the overwhelming risk risk of Time Premium Decay,
simply an expense ratio from Pro Shares.
And you can buy.sell easily with tight Bid/Ask during NYSE hours with above average liquidity.


Finally, my friend, just some words of advise if I may from one trader to another.
Never risk more than your sleep, or comfort level can handle. Watching futures overnight is fine, I do the same,
But living or dying by what the market is doing, when you can't get out overnight, is a recipe for a heart attack or an early demise.
You are an exceptional gifted, You should make it easier on yourself by getting out of options, and into Leveraged ETF's, if you can.

Reply
@The_Unwind, Yes indeed I am looking at it right now. I am researching trends as we speak and I start to lean in your direction, perhaps this is a Bull Trap after all. I have found a Bearish Gartley and it's not pretty, am posting in a few minutes. And yes, I don't want to be The_Early_Demise, LOL! Thanks again for all your support and encouragement!
Reply
lkdahleh DaddySawbucks
@DaddySawbucks, this is sure not a bull trap! I see some sideway/lower consolidation for a couple of days (lower doesn’t mean something major maybe 100-150) points and then a major explosion to the updated and a retest of ATH. I’m very confident about this finding and I think it will take everyone by surprise. Buckle up...
Reply
@lkdahleh, Maybe. I'm worried though see my latest post. All risky and uncertain be careful!
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