Chris and Thread,
Wonder if you'd be interested in opening a discussion on this unusual chart pattern on the DJIA that has formed over the last two years...?
Maybe you've already discussed it...?
These charts are printable as linked.
DJIA - daily - 6 months
siliconinvestor.com
DJIA - Daily - one year
siliconinvestor.com
DJIA - weekly
siliconinvestor.com
DJIA - Monthly
siliconinvestor.com
The monthly INDU chart is a diamond formation.
The weekly and daily's suggest other patterns and make this a fascinating chart.
I see 7 ways to view this complicated pattern.
1] bullish coil - from Oct daily bars
2] bullish rectangular consolidation pattern
3] symmetrical triangle - from Aug
4] two separate symmetrical triangles
1st broke up and quickly failed in August
2nd broke down
5] expanding triangle to the left and a symmetrical triangle right
6] weekly and monthly diamond
7] yearly wedge
These diamonds "...usually show up at market tops." (Murphy)
To me..., this is an expanding triangle that turned into a diamond, which contains a recent rectangular consolidation pattern or coil which is bullish, because the first touch to the rectangle. It has held fairly well within a fib structure, and sits just above the .618 level.
However, there's very little about this entire pattern that yells BUY. If one looks closely, this rectangular consolidation pattern could also be a triple top and therefore a reversal pattern, ready to drop shortly.
Everyone who charts, pro or small player is watching this large formation. Which adds to the fascination and prospective move as the apex resolves.
I believe the market will break higher and then fade quickly like the first symmetrical triangle did in August. Because I don't believe the large traders want the market to break out to the downside, they will support the move up and expect the public to follow. Any failure to rise out of this pattern would open the door for significantly lower prices.
When 9900 is broken this chart pattern becomes a topping consolidation.
Measured move up is about 12,500..., down about 8500, but these targets have to be tightened up, with other work.
What'cha Think...?
Chip |
