Here is the daily chart 9 months or 201 trading days. From the bottom of the lowest point of the bars - one bar is one day with high, low and close - a five wave trend took the index to the top. That top became a double top. A break below the lowest point between the tops will be negative. A break of the bottom came ( wave 1) but supported by the 50 MA a third top came (wave 2 but ended lower than the double top. Then a drop came to a new low (wave 3). After the third waves bottom a rally started (wave 4). After the last and highest point in the fourth wave the fifth wave and the longest downtrend started.
From that bottom a five waves uptrend took off and got its top at wave 1 bottom from the first down trend - from the top of the chart - that bottom. This was the first wave on upside but had 5 mini waves in the trend. Then came the second wave on downside - a correction - and finally the third wave on upside started and there we are now with a 5 days sideways trend.
So we have a 5 waves down trend from a big top and a 3 waves uptrend so far. The main rule in the Elliott Wave theory is that when a long uptrend get a FIVE waves in a down trend so is that the beginning of a bear market. This five waves downtrend can only, and will be followed of a 3 wave uptrend that will stop either when reaching the first waves bottom (from the double top), the double tops bottom or the second waves top.
Right now the DOW is trying to get above and hold the double tops bottom. On this chart you see the resistance (R) line at 13.418.7 which has been closed above only once. Meanwhile the 8 day MA is slowly climbing towards the top formation giving support for a sudden drop. The 21 MA is also up and a sudden fall through these two MA:s is currently not likely.
It is important to remember the big gap that came Jan 2. It will be filled sooner or later.
To me it is important to know if the current third wave up will go higher or not. Here comes the fundamentals into the picture. Today the company results for the fourth quarter will start coming as always with Alcoa first.
Finally for new readers. Every chart should be clicked on to make it bigger. Then you will see at the top left, the MA:s and in what order they are. Here it is 200-50-8-21 with different colors. Now look at the square in the chart which at the top has 08-Jan-2013. Below is all information about the last bar in exact numbers. You see High, Low and Last. Then comes the MA:s in the same order from above as you see them in the left top of the chart and with the exact point these MA:s are right now.
Do not hesitate to give me feedback.
No comments:
Post a Comment