Tuesday, April 29, 2014

Ending Diagonal in DJIA

A very interesting observation was made today in DJIA. Dow's Elliott Wave structure has confused us for a while. I personally have tried to evaluate the structure from several different angles, but was not successful because of the fact that DJIA had multiple 3-waves since October 2013. 3-wave are very difficult to interpret.

Since 3-wave sequences appear in either triangles or in diagonals, it seems like DJIA is tracing out an ending diagonal. Following chart shows a matured ending diagonal with all sub-waves being 3-waves. We are just missing one spike, followed by sharp sell-off. We might get that spike tomorrow, after FOMC meeting.  

Sell-off could lead to lower price levels. Typically, when an ending diagonal breaks, prices quickly trace back to the origin. This would mean that the price target would be around 15000 or lower in DJIA. This observation will be in line with the IPM Model turn dates and the 8/4 test completion to the downside. 

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