Bottom line:  Dow Jones hits resistance around the 28250/350 zone and it remains to be seen if a bearish reversal materializes here.

Technical Analysis:

Dow Jones has managed to print yet another high above 28250 levels, discussed last week. The indice has hit fibonacci 0.382 extension for the 5^th wave, within Wave C rally until now. It is quite possible that bears take control from here but a push above the 28330 mark would witness yet another high around 28600/700, which is the fibonacci 0.618 extension. A drop to 28000 levels at least, and below 27750 levels would confirm that a meaningful top is in place for Dow Jones and that bears are back in control. Looking at a larger wave structure since December 2018 lows at 21712 levels, Dow Jones has carved a potential A-B-C zigzag and it is seen to be unfolding lower degree wave 5, within Wave C. If the above wave count holds true, we should witness a bearish reversal  from current levels (28250/60), or after printing yet another high around 28600/700 mark. The medium term zigzag structure from 21712 lows, could be a part of the larger degree expanded flat and a reversal has got potential to drop at least to 2018 lows. Considering the risk-reward ratio, a high probable trade setup from here should be seen on the lower side and traders must avoid getting into bull traps. Furthermore, strong bearish divergence is seen on Daily RSI (not shown here), which is clearly trading below the previous swing highs. Considering the above facts, an aggressive trading strategy could be seen on the south side against 28900 with potential targets at 25000 and 21000 going forward. We would bring short term wave counts as price action develops from here. Watch out for a bearish reversal from either 28250/300 or 28600/700 levels.

Prepared by

Harsh Japee, Technical Analyst

Dow Jones Chart

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