Dow Jones Industrial Average closed the week ahead of where it started. However, the last couple hours of trading on Friday saw profit taking as DJIA slipped going into the close. We wrote earlier this week how the Dow Jones Industrial Average inability to dive was keeping the bulls alive. Since breaking above the trend line, we anticipate sideways to upward trading in the coming days.
The break above the blue trend line appears to lock in an a-b-c zigzag correction from August 8-21. This shifts the near team pattern towards a larger triangle pattern or possibly a bullish new impulse is underway. If the pattern ends up being a triangle, then it implies sideways trading between 21,599 and 22,000. Otherwise, we are anticipating a continued bump higher to retest the previous high near 22,178.
DJIA did pivot today near the 78.6% retracement level of the August 8-21 down trend. A continuation of the Friday afternoon correction hints towards a retest of 21,650. However, DJIA is absent an impulsive move lower which implies pressure is sideways to higher over the medium term.
A breakdown below 21,200 would cause us to stand back and reconsider the wave pattern. We have been in a long bull run since 2009 with minimal corrections along the way. As always, devise an exit plan before you enter. Read other traits we found of successful traders here.
---Written by Jeremy Wagner, CEWA-M
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