1929 rally in Dow Jones?

Posted by Max Andronichuk / / /

Here it is, my first post concerning financial markets. Let me explain that with the charting software I am using (can afford) I am not able to provide any timeframe smaller than daily, but hopefully you will still find it helpful.


The Dow Jones looks to me like it has made an (a)-(b)-(c) decline to make a big (A) down (apologies for this big A not being labeled). The primary reason I am labeling this as an (a)-(b)-(c) decline rather than a 1-2-3 is because of the wave structure of wave (a)/1. I cannot see a clear 5 wave down without an overlap to make a 1. What I do see however is a clear zigzag, with divisible 5 waves in both the a and c waves to make a clean ( a ). The rally we are seeing also seems too prolonged to be a wave 4 when you compare it to the duration of wave (b)/2.


This bear market rally has surely been quite painful to watch for us devout bears out there, but it looks like we may be forced to sit on our hands for a little while longer. Looking at the rally so far I think we can say we have seen and a-b and are in the final C leg up, which we should keep an eye out to have a 5 wave structure (as this is a zig zag).

I have put in two Fibonacci retracements, assuming that the above analysis is so far correct. The first Fib retracement levels are of the big (A), the second Fib levels are of the (a) for this big (B) we are seeing.

Here is the interesting part...the Fib projection of wave (a) of (B) clusters with the 50% retracement of wave (A). This increases the likelihood that we could see this wave (B) take the Dow Jones towards 10370.

Interestingly if this does occur, the current market crash will look very reflective of the 1929 wall street crash, the key 50% retracement level is also the most important retracement level for Gann traders, keep this in mind (Gann correctly predicted the 1929 crash).

The last thing to keep an eye on is the MACD, I have drawn in a possible column that the MACD could be in, I will be watching to see how the indicator reacts to the support/resistance lines drawn in. If these lines are respected, a MACD sell signal at the upper end of the column near the price of 10370 could be seen as an important sell signal.



Short Trend: Down? (possible correction coming)
Medium Trend: Up (10370 target area)
Long Trend: Down