A look at DJIA weekly and monthly chart

In my last entry of DJIA, I stated that it was in process of pattern formation, either a rectangle or a tripple bottom. I was wrong on both accounts, it was a double bottom, but measurement of its objective is the same as the tripple bottom.

The reason why I was wrong is because I assume at the point of analysis that there is one more leg down, which is base on assumed behaviour of a rectangle (abcde wave pattern). The up-trend thus came earlier than I thought.

Fig 1 DJIA Weekly Chart

Today, I forgo the daily chart to look at a higher time frame, the weekly chart. What hits me is the completion of a 5-wave up and a single wave down. The behaviour of the single wave down seems to contain a mini-three waves pattern. Thus I would suspect that this is only the beginning of the counter wave. We are probably in process of the B wave formation.

If base on mesurement from the daily chart analysed earlier with a double bottom of objective 10,878, it coincide with the resistance that I have placed in the area. This is very close to a full retracement of the chart. If the A wave is a 3-wave formation, it is very likely that we might be seeing a abcde 5 wave patterns. here instead, should B wave having a full retracement.

On the hind side, I forsee an alternate probability that the double bottom failed to reach its objective. Currently Dow Jones is clinching onto the outest arc of the Fibonacci Arc. It should be only time that it will break away to continue its fall. There are 2 reasons for this: There is no divergence on the weekly indicators; Counter wave too short considering the up-trend stretched from Mar 2009 till April 2010. A total of 13 months, the down trend should takes around half the time, around 6.5 months.

Fig 2 DJIA Monthly Chart

While result on weekly is relatively indeterminant, it would be beneficial to seek audience from higher order. No I don't mean God, I mean monthly chart. On monthly basis, the direction is clearer, both RSI and Stochastic are on down trend. Not only that divergence is visible on Stochastic.It is thus quite clear which path has the higher order decided for Dow. It is coming down.