DOW INDUSTRIALS: WEEKLY

Dow is expected to face strong resistance between 12,300-12,500, defined by two channel resistances as well as the 78.2% fibo retracement of the entire decline over 2007-2009.

DOW: DAILY

Without getting too much into the technicalities of wave structure, a glance of the chart above clearly shows the copybook wave pattern unfolding in the market. Bullish EW analysts say that wave 3 is unfolding and hence the trend in up for 2011 and beyond. Bearish EW analysts say this rally from March’09 is a larger corrective pattern, unfolding in a A-B-C formation. The question is who is right? I think at the current time frame both are. Therefore, let’s find out what are the important markers on chart that can help us in future to decide which camp is right.

Marker No. 1:

I believe, the current uptrend, defined by the channel, is intact as long as last swing

high of November’10 is not violated on the way down, i.e., 11,450.

Marker No. 2:

Trend change will be confirmed and the bearish camp will have an upper hand if the

second circuit breaker is tripped, i.e., 11,258, April’10 high, or, the top of the last 5

wave rally.

Therefore, keep an eye on DOW. Immediate resistance is around 11,050,

channel resistance on daily chart and then between 11,300-550, on the

weekly chart. Hence, players can lighten longs as Dow heads into resistance.

Regards,

Anindya Banerjee.

Anindya1979@gmail.com