Dow Jones Breaks Below 27500 Support

09 September 2020

Dow Jones seems to be finally reversing lower after having hit 29200 levels last week. The indice has further dropped below 27500 initial support breaking below its counter trend line support as well. Bears remain in control as the indice enters the sell zone.

Dow Jones probable wave counts are as follows: The indice had dropped from 29600 highs in February 2020 through 18200 lows in March. The above drop can be clearly sub divided into 5 waves, making it an impulse wave labelled as Wave (1) of a larger degree.

As a general guideline, an impulse drop is followed by a corrective rally which should not exceed the initial price of Wave (1), which is 29600 mark in this case. Dow Jones has managed to carve a corrective rally from 18200 through 29200 respectively.

If the above proposed wave structure holds well, the indice should proceed lower breaking below 23000 support to confirm a trend reversal. Also note that downside potential remains below 18200 as Wave (3) progresses further.

The short term wave counts might be suggesting that a lower degree impulse wave might be complete from 29200 through 27400 respectively. If the above is correct, Dow Jones might witness a counter trend rally towards 28600 levels before turning lower again.

Traders might be inclined to initiate fresh short positions around 28600 mark with protective stop above 29600 and projected targets towards 25000, 23000 and further.

Prepared by
Technical Analysis Team

Disclaimer: This information has been produced by a third party, for general information purposes only, and is not indicative of future results. Abans Global takes no responsibility for its accuracy or completeness. Any opinions expressed do not reflect those of Abans Global. This information does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should seek independent advice before making investment decisions. Reproduction of this information, in whole or in part, is not permitted. Please note: If you are a Professional client, you are not eligible for negative balance protection and you could lose more than your initial deposit.

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