Dow Jones carving a lower high around 26300/400 before reversing

Dow Jones has reversed lower from 27600/700 levels last week, forming a potential Engulfing Bearish candlestick pattern on the daily chart. The larger degree wave counts are as follows: The earlier drop between 29600 through 18200 was in 5 waves, hence impulse Wave (1) on the chart here. The subsequent rally was corrective and managed to reach just above the fibonacci 0.786 retracement of Wave (1) around 27600/700, Wave (2) on the chart. If the above counts hold well, Dow Jones should stay below 29600 and reverse lower towards 18200 handle. The lower degree wave counts suggests that the drop between 27600/700 and 24544 could be wave 1 and the subsequent rally towards 26300/400 could be wave 3, within higher degree Wave (3). If the counts are correct, Dow Jones should sharply reverse towards 18200 levels from here. Overall, structure remains bearish as long as prices remain below 29600.

Strategy:

Short against 29600, targeting below 18200.

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