Professor’s Comments – Before the Open 7/21/2021
Posted by OMS at July 21st, 2021
In yesterday’s Comments I discussed how the Dow would likely stage a sub-wave 4 retracement rally back to the 34,600 level before falling again. This happened yesterday with the Dow getting as high as 34,621 before pulling back to close at 34,511.
However, because the pullback into the close was not sharp (impulsive), its now far more likely that yesterday’s early rally was wave ‘a’ of Wave 2 up and the late pullback being wave ‘b’ down of 2 up. If this is the case, the Dow could stage an additional wave ‘c’ rally to complete Wave 2 up today before falling. The rally could get as high as 34,800+, which would be a 0.786 Fibonacci retracement of the Wave 1 decline that started from the 16 July high.
In other words, I will now be looking to short the Dow from the 34,800 level +/- . My initial downside target for Wave 3 down is the Wave 1 low of 33,741. A break of this low would provide additional confidence that Wave 3 down is underway, and the next Bear Market has started.
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments