It has been more than five months. On March 19th, 2015, we published “Dow Facing Another “STOP” Sign?”, where we warned you about an ending diagonal developing on the daily chart of Dow Jones Industrial Average. That Elliott Wave pattern made us think “there is a good chance for a decline of more than 2300 points”. The next chart will visualize the forecast for you once again.
As visible, we were preparing for a new all-time high in wave 5 of (3) to the upside to be followed by a swift and sharp bearish reversal. As the chart shows, the new high was expected reach 18 300. On the other hand, Dow Jones had to fall to somewhere around 16 000. What has happened since that forecast? The next chart makes it clear.
Dow Jones, to be exact, climbed as high as 18 365. What followed, came as a complete surprise to the majority of investors, who were highly bullish at the time. And while fundamental analysts are trying to explain why, the Dow is plunging below 15 900 right now. In other words, our 16 000 target has been met and exceeded. This situation is a great example of the Elliott Wave Principle‘s ability to help you predict major reversals in benchmark stock market indices. But where does this recent crash fit into the big picture count?
It turns out, the current slump should be wave (4) within a five-wave impulse to the upside, which started in March 2009. That is why we expect the Dow Jones to find support soon. However, the daily trend is undoubtedly bearish right now. And you should never go against the trend. Better wait for the markets to calm down first. If this is the correct count, Dow Jones could reach the 19 000 mark in the next year or two.
