Dow Jones continues to remain in control of bears as the indice clearly holds below critical resistance at 29600 handle, which was carved in February 2020. Bears would be determined to break below 25000 levels over the near term.
Dow Jones is also holding below its lower high around 29200, which was carved on September 03, 2020. The indices faces short term resistance around 28500 mark and if it holds below that, we might be witnessing a sharp drop lower.
Dow Jones probable wave counts from 29200 highs are as follows: The drop between 29200 and 27450 could be marked as lower degree Wave 1 (label not shown). The subsequent rally was corrective and terminated around 28364, potential Wave 2.
Going further the indice might have carved sub waves I and ii of Wave 3, around 26530 and 27700/800 respectively. If the above proposed structure holds well, Dow Jones should stay below 27700/800 mark and break below 26500 as iii rd of 3rd wave unfolds.
Furthermore, Dow Jones has carved larger degree Waves (1) and (2) around 18200 and 29200 respectively. The above is classic Elliott Wave pattern 5-3, which should ideally be followed by yet another 5 waves lower towards 18200 mark, going further.
Traders might be inclined to hold short positions initiated earlier and also look to add more around 27500 resistance, with protective stop above 29600 and projected targets below 18200 respectively.
Technical Analysis Team
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