As shown above Dow has formed a 'head and shoulders' reversal pattern and was confirmed by the volume pattern. Major wave 1 that was started in March has been completed, the main interest now is to find out how low the current major wave 2 will drop. Whether it is going to be a 30%, 50% or 100% pull back ? It is hard to project at this moment. The first guess is, Dow may go for an 'inverted head and shoulders' formation as shown below. As discussed in my previous posts, under this formation Dow is likely to go to 7500.
Same as Dow, S&P 500 is having a similar pattern and is likely to form an 'inverted head and shoulders' with 835 as the first target.
Besides Dow and S&P 500, it is interesting to note that major European bourses are showing similar patterns and are likely to go for 'inverted head and shoulders formations as shown below for FTSE, DAX and CAC.
In the last 3 months rebound, Asian bourses in general have out performed the US and European bourses. The indices for these markets have moved much higher than the last 'congested' area in the downtrend as shown below. It is likely that the respective Asian indices in the current pull back will stop at the top of the 'congested' area for an approximately 40% to 50% retracement as shown below.
For Nikkei 9000 can be a good support level.
Top of the congested area is about 15,000 for Hang Seng Index.
1900 should provide good support to STI
For 50% retracement, KL Composite Index will drop to around 960.
As shown above Dow has formed a 'head and shoulders' reversal pattern and was confirmed by the volume pattern. Major wave 1 that was started in March has been completed, the main interest now is to find out how low the current major wave 2 will drop. Whether it is going to be a 30%, 50% or 100% pull back ? It is hard to project at this moment. The first guess is, Dow may go for an 'inverted head and shoulders' formation as shown below. As discussed in my previous posts, under this formation Dow is likely to go to 7500.
Same as Dow, S&P 500 is having a similar pattern and is likely to form an 'inverted head and shoulders' with 835 as the first target.
Besides Dow and S&P 500, it is interesting to note that major European bourses are showing similar patterns and are likely to go for 'inverted head and shoulders formations as shown below for FTSE, DAX and CAC.
In the last 3 months rebound, Asian bourses in general have out performed the US and European bourses. The indices for these markets have moved much higher than the last 'congested' area in the downtrend as shown below. It is likely that the respective Asian indices in the current pull back will stop at the top of the 'congested' area for an approximately 40% to 50% retracement as shown below.
For Nikkei 9000 can be a good support level.
Top of the congested area is about 15,000 for Hang Seng Index.
1900 should provide good support to STI
For 50% retracement, KL Composite Index will drop to around 960.
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