Dow Jones Resistance Remains Intact Around 29600

19 August 2020

Dow Jones might be very close to carving a meaningful lower top just around the 28100/200 handle. The indice needs to break below the counter trend line support and also 29600 levels to confirm that a meaningful top is in place just below 29600 resistance.

Dow Jones probable wave counts are as follows: The indice had earlier dropped between 29600 and 18200 levels clearly sub diving into 5 waves. The above impulse drop has been marked as larger degree Wave (1) on the chart here.

An impulse wave should be normally followed by a corrective wave, which could be a zigzag or a flat or a triangle. In this case, it is looking like a zigzag counter trend rally from sub 18200 through 28100 levels respectively. It is labelled as A-B-C, Wave (2) of a similar degree.

If the above proposed structure holds well, USDJPY would stay below 28100/200 levels and turn sharply lower towards 26000, 25000 and 23000 levels respectively. A break below 23000 would confirm that Dow Jones is heading toward 18200 and further.

Also note that the counter trend Wave (2) has managed to reach up to fibonacci 0.88 retracement levels around 29200/300 on the chart. A bearish reversal from here remains high probability since this is the last retracement levels of earlier drop Wave (1).

Traders might remain poised to hold short positions initiated earlier and also look to add further around 28000 mark, with protective stop above 29600 and projected targets at 26000, 25000, 23000 and 18200 respectively. Looking lower from here.

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