DOW update: $17,050 clearly didn’t hold. Where are we heading now!?

This is a 1-page excerpt of I.I.’s 12 pages long weekly digest available to premium members only.**

“Over the past 2 weeks I’ve been highlighting the importance of the $17,050 level on the DOW. While it did find support on August 12, but the market decided to take the bearish path instead and as we all know on Thursday it broke down and heavy selling commenced into Friday. So on everybody’s mind is now “what’s next”. Well, if we look at Figure 1 the Primary III, IV count is sported, which we favor 80:20 over major 4. You will see (yellow) major a an b of a zigzag (Primary II was a flat) in place, and price is now in intermediate c of major c: the strongest wave… clearly! Using Fib-extensions of the different wave-degrees that make up Primary IV; major a (of Primary IV), intermediate a (of major c), and minor a (of intermediate c) we then find;

  • the 200% extension of major a, from b (in red) at ~16,325;
  • the 176.4-200% extension of intermediate a , from b, (of major c) in green at around 16,415-16,290;
  • the 161.8-176.4% extension of minor a, from b (of intermediate c of major c) –not shown to prevent clutter- at around 16,460-16,390.

Figure 1. DOW daily chart: Primary III, IV count. Important support- and Fib-zone between 16,500-16,250 (click to enlarge)

dow daily

In addition, albeit somewhat difficult to see due to overlap with the aforementioned Fib-levels, the (white) 23.6% retrace of all of Primary III is at 16,460 and the (yellow) 76.4% retrace of the Major 5 is at 16,420. Moreover, since early 2014 the 16,500-16,250 level has acted as support and resistance (white rectangle); what once was resistance may now act as support. Last, but certainly not least. The blue ascending trend-line which goes back to the price low made in 2009 is currently at ~16,390. Hence, there are 7 lines of objective facts that point towards the 16,500-16,250 area as being an important zone for price; adding weight to the evidence that we could expect a price low in this region.

Alternatively, if the market decides to continue lower, then the lower purple ascending trend-line, which is parallel to the upper purple line that connects with the Primary I high made in 2011, will come into play. Currently it resides at 15,920 and rises about 120p/month (6p/day). This would be in line with the weekly and monthly S1 levels: $16,081 and $16,075, respectively (not shown), while the lower bollinger band on the monthly chart is at $15,827. Hence, also here we have a nice cluster of support. These price levels are at the most 3.8% below current levels. From there or from the somewhat higher price range I then expect a multi-month rally for Primary V to (price levels for premium members only). Lastly, I want to point out that Major a took 33 trading days. Currently major c is underway for 32 trading days. Using a time-Fib of c=a, then we should expect major c to bottom on Monday.”

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