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Dow Jones Industrial Average Primed for Further Correction

Dow Jones Industrial Average Primed for Further Correction

Jeremy Wagner, CEWA-M, Head of Education


Dow Jones Industrial Average gapped higher on the open today with prices eventually driving into a shorter term potential pivot zone. Previously, we wrote how DJIA may be finishing its third wave. Therefore, we are anticipating a fourth wave correction to take hold down towards 20,000-20,400.

Zooming into smaller chart time frames, it does appear the market is seeing cracks forming in the foundation. In the chart below, prices appear to have fallen in impulsive fashion. This suggests a partial retracement higher has an elevated probability of holding below last week’s price high of 22,178.

The price rose today to a high of 22,011 that is a normal retracement level. We do not know for sure if the counter trend bounce is over, but we do anticipate that it may end within the next couple of days leading to a resumption of the downward price action.

As a result, shorter term traders can consider trading the shorter term trend lower. Medium to longer term traders may consider waiting out a dip in price towards 20,000-20,400. In Elliott Wave terms, this multi-year bull run appears incomplete, though it has become quite mature. Most of the upside in price is behind us so traders will need to be nimble.

Why do traders lose money? Here is the biggest mistake we have researched.

---Written by Jeremy Wagner, CEWA-M

If you are interested in more in depth study of impulse patterns which DJIA is in, watch this one-hour long webinar recording specifically on impulse patterns (registration required).

Want to learn more about Elliott Wave analysis but don’t have time to watch a video? Grab the Beginner and Advanced Elliott Wave guides and keep them near your computer.

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

Follow on twitter @JWagnerFXTrader .

Join Jeremy’s distribution list.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.