Dow Jones (US30) – Evening star formation warns of deeper correction
Weekly: Posted a Bearish Outside Week (week 29th January) and the market has failed to recover to here despite new all-time highs being posted in S&P’s. This is often an indication that a top is in place. The correction since start of June is forming an ending wedge formation with this weeks rejection of the top of that formation boosted by a shooting-star type candle. The 78.6% Fibonacci retracement level held firm and the rejection could lead to further weakness with stochastics crossing at over-extended levels.
Daily: The reaction higher from the bullish hammer (15/08/18) looks to have topped out, forming an evening star formation. The sell-off stalled and reacted higher from just in front of 25600 although this reaction rally has also stalled. Overnight dip has been bought into, however, we expect further selling to continue as stochastics cross lower on this time frame. We look to target a move to the previous swing lower near 25000.
We look to Sell at 25700
Targets: 25200 and 25000