DOW

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.

This is a possible scenario for the DOW.....


dl.dropboxusercontent.com/u/7238706/DOWdaily.png

..... if, and I mean if, this is a wave 3, then it only retraced a little over 14.60% of the move from 11,150 to 16594. Now, whilst this doesn't invalid the move as a wave 3, it would be more usual for the retrace to be somewhere between the 23.60 and 38.20% of said move. If this should be the case there is the possibility the move down to 15706.90 was just wave A of an ABC, with the target for a wave C between 15,287 and 14,739, being the respective %'s already mentioned.

The possibility remains this is not a wave 4, and this is not a five way move, but an ABC with the A finishing at 16,241; the B at 16,550; and the C at last evenings low of 15,706.90. This being the case ignore this chart: it's a pile of rubbish

However, if this turns back down between 16,151 and 16,255 , then hold onto your hats as it could fall to somewhere between 15,310 and 14,515..... a zigzag 5-3-5 swings, might bring us to the supports at 14,763 and 14,717. I favour this scenario but would be very happy to be proved wrong

Missed by 2 points...feeling gutted again....why 2 pips...why.....


dl.dropboxusercontent.com/u/4899609/dow29thjan2014.png


The first attempt trade has happened as it was only 2 points away so now its best to leave the trade alone.