The Dow Jones Industrial Average reached above 17 000 today, recovering from the 900-point decline, which ended on 8th August. If you have been following our Indices section, you may have come across some of our articles about DJIA.
In the suggested material you can see that we were expecting that recent sell-off, because sooner or later, there should have been a fourth wave of that ending diagonal. Then, we prepared you for Dow Jones’ present recovery, since we were expecting wave 5 to the upside. Now let’s see how the larger pattern looks like.
And this is where things get interesting. According to The Elliott Wave Principle, after every five waves there should be a three-wave retracement in the opposite direction. But this is more than an impulse – this is a fifth wave ending diagonal of a larger sequence.
According to this count, bulls are running out of power. Another new high should be expected, probably around 17 300, but then the bears should take control of the situation. The minimum downside target lies at 15 340, but Dow’s loss could be much greater.