Today we will talk about Dow Jones Industrial, in which we see quite clear and very interesting formation. We are talking about an ending diagonal (wedge) pattern.
Well, DJI is rising, but as you can see, it's very slow, so it's obviously running out of steam, which we see it as part of an ending diagonal (wedge) pattern as part of wave 5 of a higher degree wave III.
An ending diagonal pattern is a type of pattern that can occur at the completion of a strong move. It reflects a “calming” of the market sentiment such that price still moves generally in the direction of the larger move, but not strongly enough to produce an impulsive wave. Ending diagonals consist of five waves, labeled 1-2-3-4-5, where each wave subdivides into three legs A-B-C. Waves 1 and 4 overlaps in price, while wave 3 can not be the shortest amongst waves 1, 3, and 5.
Respecting the price action and wave structure, seems like DJI is looking for another jump for wave C of (5) up to 35700 - 36000 area to complete that wedge pattern within a higher degree wave 5 of III and then watch out for a bigger and deeper correction within a higher degree wave IV that can send the price back to 33k support zone.
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@wsbza, yes, but key is upcoming fifth that has to be shorter than three.
peterdcharlebois
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With every new low, and especially below 34700, the door opens to the possibility that wave (5) has Truncated. This is to say it fell short of making a new high. Not that common but not unheard of. A sudden acceleration downward will be another clue.
TradeItAnyway
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I think we made minor wedge wave 4 .. testing 34650 wave 2 , we correcrted 61.8 fib level at todays low 34775 ( future ) the fact we broke trend line diagonal without testing 36000 as wave 5 diagonal
palicska
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Hi!
Thanks! I came to the same conclusion and labeling regarding DJIA. I am courious about your labeling of the S&P. The indexes usually move together, the difference is the length, S&P is a bit messier. I linked my labeling of S&P.
ForexTrendline
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awesome idea, thanks for sharing and keep up the good work!