It has been a fast decline from 17 148 to 16 324 so far, but it is not all bad for the Dow Jones Industrial Average. If we take a look at the wave structure of this sell-off, we will see that it is not impulsive, because it consists of only three waves A-B-C. This means that it is only a correction of the larger uptrend.
This count fits perfectly into the position of wave 4 of the ending diagonal, which we think is developing on the daily chart of the DJIA.
Recommended reading: Dow Jones and the extreme bullishness
If this is the correct count, we should expect the beginning of wave 5 to the upside, which should lead Dow Jones to a new high, probably around 17 200.
