Dow Jones might have completed a complex Wave C around 28400 mark yesterday. If the indice has carved a lower high, we should witness a sharp reversal from here. A break below 27530 mark would confirm that a meaningful lower top is in place around 28400 mark.
Dow Jones probable wave counts are as follows: The indice had dropped from 29600 through 18200 levels sub-dividing into 5 waves. The subsequent rally from 18200 through 28400 seems to have sub-divided into 3 waves A-B-C until now.
The indice might have managed to complete an important Elliott Wave pattern 5 waves down, followed by 3 Waves up between 29600 and 28400 levels respectively. It can be labelled as Waves (1) and (2) respectively on the chart here.
If the above structure holds well, Dow Jones should stay below 29600 mark and continue drifting lower towards 26000, 25000 and beyond. Immediate support is around 27530 mark and a break there would confirm a potential trend reversal.
Also note that Wave (2) seems to have terminated just above the fibonacci 0.88 retracement of Wave (1), which is passing through 28230 levels. High probability remains for a bearish reversal from here as bears prepare to take control back.
Traders might remain inclined to initiate fresh short positions around 28000 mark with a protective stop above 29600 and projected targets below 25000 at least. A break above 29600 would still keep the bearish structure intact with a change in wave counts.
Technical Analysis Team
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