Dow Jones Industrial Average (DJIA) has enjoyed a nice four day rally recovering most of the losses from last Wednesday May 17. DJIA is playing according to the pattern previously identified and appears to be grinding sideways in a triangle.
We are anticipating the ‘d’ leg of the triangle to end soon with a small turn lower to take place from nearby levels. This last dip lower would be labeled an ‘e’ wave, the final leg of the triangle. Therefore, we are anticipating the triangle pattern to end above 20,491. From there, a burst higher to new highs may begin.
Therefore, waiting for the ‘e’ leg to form and anticipating the end of the ‘e’ wave is the preferred trading method. The higher probability model suggests the April low of 20,371 likely holds and becomes a key level for the immediate bullish view.
Though not anticipated, a move to new lows below 20,371 would force us to reassess the wave pattern. An immediate break above 21,170 opens the door to options. On a break higher, we will identify levels to keep an eye on.
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---Written by Jeremy Wagner, CEWA-M
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Listen to the 6:30 to 11:00 minute mark of Monday’s webinar recording to hear and see the description of the Dow Jones triangle pattern above.
EURUSD has shot up to 1.1268…follow this link to see if we are there yet for a high on EURUSD.
