Performing as anticipated.
Our forecast for the Dow Jones Industrial Average (INDU Index) to register additional gains was once again in the money as the index appreciated some 3.1% last week. However, with Wave 1 having possibly fulfilled the benchmark 61.8% fibonacci retracement of its previous downtrend from 9,088 to 6,469 when the index had hit its monthly high during Apr 09, it is therefore likely that the corrective Wave 2 is forthcoming.
Preferred Wave Count
Wave 1 may have ended. Assuming Wave 1 had travelled from 6,469 to 8,075, a conservative price target for Wave 2 would be the 38.2% fibonacci retracement point. With this resulting in the 7,462
mark [ derived from 8,075 - 38.2% * (8,075 – 6,469) ] and coupled with the 50-day moving average at the 7,562 level, we therefore identify support at the 7,462 – 7,562 region.
mark [ derived from 8,075 - 38.2% * (8,075 – 6,469) ] and coupled with the 50-day moving average at the 7,562 level, we therefore identify support at the 7,462 – 7,562 region.
Alternate Wave Count
Wave 1 still at play. Should the index depict a clear break above the 8,087 level, this would indicate that Wave 1 has not yet ended and that the ensuing momentum should push it to the resistance area at 8,446 - 8,470 – this level is derived from the 76.4% fibonacci retracement of 9,088 to 6,469. Nevertheless, we do not think this would occur in the short-term as the 14-day ADX is still languishing at tepid levels.
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