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Dow Jones: Two positive closing and the CD leg will extend
Written by article default Tuesday, 09 November 2010 12:22
The index succeeded in closing positively above 1162.00 zones- the previous suggested PRZ or potential reversal zones for the bearish harmonic AB=CD pattern-.Not only that but we could have been able to catch a weekly closing above 1285.00 which represents the most important 61.8% Fibonacci level for the wave from 14260 to 6460 zones-colored in green-.
This closing has been achieved on the weekly interval not a daily chart and not a four hour chart.
Those above mentioned closing argued us to study the weekly chart and we will notice that the index is on its way to form a potential harmonic AB=CD pattern as seen on the image below.
Actually, the breakout above 1162.00 areas could be described as a decisive one and thus, the door is now opened towards the extension of Fibonacci projection at 261.8% of the suggested BC leg.
This Fibonacci levels is valued at 11938.00 and this is our main technical target for the time being.
AROON indicator as a representative for trend indictors is presently solidifying our constructive bullish anticipations but on the other hand, Stochastic as a representative for momentum indicators is currently showing a negative crossover. Thereby, we believe that some kind of fluctuation and corrections towards 11285.00 and might extend towards 1162.00 zones to retest the broken levels before resuming the projected bullishness over short term basis.
One thing that can damage this outlook, whish is a negative weekly closing below 1162.00 zones and in that case the breakout will be changed from a decisive to a false breakout.