Market Technical View is a blog that mostly concerns the technical analysis of different financial instruments like indices, commodities, stocks, ETFs and currencies.

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Tuesday, October 25, 2011

Dow Jones Industrial Average (DJIA) Technical Analysis 2011.10.25

Is the trend reversing?

The Dow Jones Industrial Average is making higher highs after oscillating in the resistance area of the September highs (11,400-11,700).

The 4 hour chart covers the whole decline started in early April and the current rally reached yesterday the 61.8% retracement area. Therefore, the 11,950 level is set to be a strong resistance adding the fact that this area represents the mid June lows (end of wave [i]).

Having this levels in mind, we can think of two scenarios, both pointing to the down-side: if sellers will overcome buyers in this area, the break of the 11,700 support will set the market for further decline; if sentiment will remain positive in the next days, we can see bull move looking to test the 12,000-12,300 area.

Keep in mind that the Elliott Wave theory states that a wave 2 (which seems to develop in our case; formed of [a],[b],[c] sub waves) will make the investors think that the trend has reversed and most of the time reaches the 66% retracement area.        

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