Dow Jones Resistance Is At 29600 Handle
22 July 2020
Dow Jones had managed to rally though 27025 (spot) levels yesterday, but could not break above the 27075 highs. The indice is expected to reverse lower as long as prices stay below 27600/700 levels for now. Bears remain poised to take control back.
Dow Jones probable wave counts are as follows: The indice had dropped from 29600 levels through sub 18200 levels between Feb-March 2020. The drop was a clear 5 wave impulse, which is labelled as Wave (1) on the chart here.
As a general guideline, the corrective rally began after 18200 lows in March 2020. The counter trend rally had reached up to fibonacci 0.786 retracement of Wave (1), around 27600 levels. This could be potential Wave (2) termination.
If the above structure holds well, Dow Jones should stay below 29600 and reverse lower towards 23000, 20000 and further. Also note that A-B-C structure was complete around 27600 and prices have broken below the counter trend line support.
Going further, the potential lower degree wave counts are as follows: The drop between 27600 levels through 24843 was also an impulse, which is labelled as Wave 1. The subsequent corrective wave was a flat, which terminated around 27071.
The above counter trend rally could be potential Wave 2, which reached up to fibonacci 0.786 of Wave 1. If the above counts hold well, Dow Jones should stay below 27600 and turn lower towards 18200 levels over the next few months.
Prepared by
Technical Analysis Team
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