the US 30 (Dow Jones Index) daily chart made a bearish pullback and bullish bounce at the 38.2% Fib – as expected in our previous Elliott Wave analysis.
This article will analyse whether a wave 4 pattern has been completed at the 38.2% Fibonacci retracement level.
Price Charts and Technical Analysis
The Dow Jones Index (DJI) broke below (red arrow) the 21 ema low and support trend line (dotted green) for a bearish price swing and a wave C (green):
- The bearish price swing bounced at the 38.2% Fibonacci retracement level (blue box), which is typical for a wave 4 (grey) pattern.
- A strong bullish engulfing twins daily candlestick pattern appeared at the 38.2% Fib.
- A bearish ABC (green) seems to be completed and price action is now testing the 21 ema resistance zone.
- A bullish breakout above the resistance trend line (orange) could confirm the uptrend.
- A bullish bounce at the 50% is still usual for a wave 4 but a pullback (orange circle) below the 50% Fib places it hold and a deep retracement invalidates it (red circle).
- The main target is the -27.2% Fibonacci target at $36,573.
On the 1 hour chart, price action completed a bearish 5 waves (blue) in wave 5 (orange) of wave C (green):
- Now price action seems to be building 5 bullish waves (blue) in wave 1 (green).
- A bearish break (orange arrows) below the 21 ema low could confirm a bearish ABC in wave 2 (green).
- A bullish break (green arrows) could see price action test the resistance zone (orange box).
- A bullish bounce is expected (blue arrows) at any of the Fibonacci support levels within wave 2 (green).
The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter.