Dow Jones might have carved a lower high around 27600 levels on June 08, 2020. The indice has since managed to trade below that mark. It could test 27000 levels before reversing sharply lower towards 23000 and further.
Dow Jones probable wave counts are as follows: The indice had dropped from 29600 towards 18200 levels sub-dividing into 5 waves. This has been marked by a larger degree Wave (1) on the daily chart here. Ideally, an impulse drop is followed by a corrective rally.
Dow Jones has produced a corrective rally since March 23, 2020 lows at 18200. The corrective wave seems to have unfolded as a zigzag labelled as A-B-C on the chart here. It might have potentially terminated around 27600/700 levels.
If the above larger degree counts hold well, Dow Jones might be preparing for a Wave (3) lower towards 23000, 20000 and further. Ideally the indice should stay below 27600 levels going further. Even if it breaks above that mark, 29600 should hold.
Going further into the lower degree wave counts; Dow jones has carved Waves 1 and 2 around 24843 and 27000 levels respectively. If the above proposed structure holds well, the indice is heading towards a major collapse ahead.
Traders might be willing to take initial fresh short positions around 27000 mark, with protective stops above 29600 and projected targets towards 23000 and 20000 respectively. A break above 29600 would void the bearish setup soon.
Technical Analysis Team
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