Dow finding support but further lows are expected.
Dow decreases by 6.32% from 31th of July when it was sitting at 27253 as it fell to 25529.5 at its lowest point today.
The price found support at the 0.786 Fibonacci level at the intersection with the 200 day MA and with the last daily candle indicating buyers pressure in the form of a wick from the buyers side a recovery could be expected.
The recovery might only be short-lived as the downside trajectory was caused by the rejection at the expanding triangle’s resistance level in which the price is correcting since 29th of January 2018.
This rejection might have been the second wave X as the WXY correction got prolonged by two more waves in which case we could see Dow significantly decreasing in the upcoming period as the wave Z develops a lower low compared to the 24th of December when it came down to 21712.5 and would retest the expanding triangle’s support level.
Another possibility could be that the next impulse wave to the upside started with the currently seen downfall being a minor correction as the 2nd wave develops before the 3rd and usually the strongest one which is set to push Dow for a breakout to the upside above the expanding triangle\s resistance line.
In either way, from here I would be expecting a recovery followed by another sell-off to the next support zone around the 0.5 Fibonacci level at 24164. If the evaluation manages to stay above the zone and starts moving fast to the upside after an interaction the bullish scenario would look more likely.
But if the evaluation continues decreasing below the 0.5 Fib level the bearish scenario in which the Dow Jones Industrial Average is headed for a lower low would look more likely.
The price found support at the 0.786 Fibonacci level at the intersection with the 200 day MA and with the last daily candle indicating buyers pressure in the form of a wick from the buyers side a recovery could be expected.
The recovery might only be short-lived as the downside trajectory was caused by the rejection at the expanding triangle’s resistance level in which the price is correcting since 29th of January 2018.
This rejection might have been the second wave X as the WXY correction got prolonged by two more waves in which case we could see Dow significantly decreasing in the upcoming period as the wave Z develops a lower low compared to the 24th of December when it came down to 21712.5 and would retest the expanding triangle’s support level.
Another possibility could be that the next impulse wave to the upside started with the currently seen downfall being a minor correction as the 2nd wave develops before the 3rd and usually the strongest one which is set to push Dow for a breakout to the upside above the expanding triangle\s resistance line.
In either way, from here I would be expecting a recovery followed by another sell-off to the next support zone around the 0.5 Fibonacci level at 24164. If the evaluation manages to stay above the zone and starts moving fast to the upside after an interaction the bullish scenario would look more likely.
But if the evaluation continues decreasing below the 0.5 Fib level the bearish scenario in which the Dow Jones Industrial Average is headed for a lower low would look more likely.