DOW

If you consider corrective waves come in sequences of 3,7,11,15,19 etc; this current sequence contains only 5 waves so far, meaning at least 2 more to come?.....

dl.dropboxusercontent.com/u/7238706/Wall...Cash%20%28day%29.png
I've drawn a trend line from the start of wave (( c )) at 10,402.20, and it coincides nicely with the supports around 14,760 > 14716. So, it's down for me

Possible short on that back test of that trend line is a good bet for the short term
That trend line tried to give it support but the fact that it did not bounce fast from that area was the signal that there were a lot of bears trying to push this lower.The first attempts normally would bounce hard and fast so once this gets tested and it does not bounce fast then that normally gives the first warning signals to get out .First attempts if good should bounce hard .
I have that trend line back test at 15518 for today and a 40 point stop should be used.
stops are a must on the dow.
There is another method i use to enter on short or longs..If the candle is a massive bearish candle like yesterdays candle then i would look to short on any pull backs on the following day if the price comes half way up that bearish candle. This level for today is roughly at 15532 so adds to the trendline play as well.
good luck



dl.dropboxusercontent.com/u/4899609/dow4thfeb2014.png

Jackozy wrote: Yep - it tried for about an hour to hang on to that trendline at 15514 but the re-surfacing of a possible US debt default put paid to that.

Possible short on backtest of that trendline, or wait for an hourly 123-low to go long for a Major wave B bounce (I'm now re-labelling 16588 as Primary III as it's hard to see it as anything else now).

14720 must hold for P IV low to maintain the wave 4 guideline (not a rule) and there are multiple supports for about 400 pts above that so hard to know which will give the bounce.

I agree sidelines is best unless you're a skilled Dow trader.

That backtest of the 16240 break would have been a great place to short!

Yep - it tried for about an hour to hang on to that trendline at 15514 but the re-surfacing of a possible US debt default put paid to that.

Possible short on backtest of that trendline, or wait for an hourly 123-low to go long for a Major wave B bounce (I'm now re-labelling 16588 as Primary III as it's hard to see it as anything else now).

14720 must hold for P IV low to maintain the wave 4 guideline (not a rule) and there are multiple supports for about 400 pts above that so hard to know which will give the bounce.

I agree sidelines is best unless you're a skilled Dow trader.

That backtest of the 16240 break would have been a great place to short!

Well I didn't see yesterday's move coming. I'm not surprised as there are so many options here. What happens now? Only time will tell. I have it at, roughly, the 23.6% fib, so it could go back up from here or it could continue down to the support in the 14,700's. I'll be sitting on the side-lines and watching.

dl.dropboxusercontent.com/u/7238706/Wall...sh%20%28daily%29.png

Here's a daily chart of the Dow with a possible wave count showing plenty more upside yet to come if it's right:



dl.dropboxusercontent.com/u/20815047/FTS...Dowdaily02_02_14.png

The trendline is at 15514-ish and that coincides with the 23.6% Fib of what I've labelled as Major wave 3 (of Primary III) which comes into play quite often in Dow wave 4s. Also 15518-522 has been a support and resistance on a number of times recently so plenty of support around this level.

There's a lot of talk about this drop being the start of Primary wave IV, which is a possibility of course, but there would still need to be a Major wave B of that and it would likely have to stay above 14719 ultimately anyway so this drop seems a bit too much too quickly to be Major A of Primary IV to me.

This trendline test will be key.

As most know i dont do re-entry on a second attempt of a support so soon after. This is dangerous ..

The best level now is to wait for the medium term trend line to be tested currently at 15505. This is where ill be going long on a first attempt basis.If 15703 gets broken the index may fall hard fast so there is a shorting opportunity for the brave on a breach of that level.Due to its support nature it may swing fast both ways so be careful.
There is an inside bar on the dow currently so a break below 15703 will activate this as well so extra bearish
For any new long positions wait for a 123 low to form on the hourly if the trend line does not give the chance.
If you look at the chart you can also see a head and shoulders forming. Some thing else to consider if we go back up from these areas.


dl.dropboxusercontent.com/u/4899609/dow31stjan2014.png

im expecting the dow to head towards the medium term trend line.