Thursday, 1 November 2012

Impulse or correction?DJIA road ahead.

The aftermath of hurricane Sandy finds the markets trying to break above resistances early in the day but with no success. DJIA still trading inside the pitchfork but with no real direction in the last two sessions. From October highs, the index forms a 3 wave downward move. Short term trend remains downwards and it is more possible to see a new low as part of wave 5, assuming that this sideways movement is wave 4.  13039 low should be used as a stop for bulls, because if it is broken the market will most probably lose another 100 points at least. However this will be the final part of the decline that started from 13661 high. If the market on the other hand does not produce another low, the market will have only made 3 waves down. As mentioned many times before, when the market moves in 3 waves it is most certainly in a corrective phase. If the market holds this 3 wave downward pattern that would mean that a new bullish upward move will be starting soon. First obstacle for bulls will be the middle pitchfork resistance(13180-200). Next resistance that would cancel bearish wave counts is 13296 (wave 1 low). If prices move past that resistance, the impulsive wave count will be cancelled as wave 4 should not overlap wave 1.

Thank you for taking the time to read my new post.

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