Recent sideways price movement across US indices has been the center of attention. Are we consolidating in order to make another run towards fresh all time highs or is the market in a topping formation. Our view regarding DOW can be seen in the chart below.
We feel it is more probable that we currently trade within wave 4 or the early parts of wave (v) of 5. Critical support levels are found at 14383-14400 area. The overlapping price movement could be explained as pairs of 1-2 waves of different degrees, implying that a rally is expected. Nevertheless we must always keep in mind the longer term chart and wave count. We are in the final stages of the move and prices will need to pull back and make a correction. This correction usually targets the previous 4th wave area. In this case, a correction could push prices towards 13700-14000 level.
Concluding, trend remains up with the expectation of a final push upwards. Caution is advised as prices are in their final wave formation and a correction will follow. As always, thank you for taking the time to catch up on my thinking. If you need help trading this index, don’t hesitate to contact us.