Dow (26,075) - Crucial week ahead.

Wave B scenario

I mentioned last week, "Dow is about to complete the wave (ii) of its wave C of VIII. If Dow starts to move lower and drops 1,000 points to go below 25,000 level , then Dow is heading for 17,000 level to complete its super wave VIII."

Dow was very well behaved on the first four days of the week. It surged 460 points to complete the wave (ii) of C of VIII. It started to move lower on Tuesday by dropping 397 points. A small technical rebound of 177 points on Wednesday followed by 361 points drop on Thursday. When Dow future dropped more than 200 points before Friday's trading I was preparing for a possible 'Black Friday'. But instead of an anticipated plunge, Dow rebounded 369 point. This 369 points rebound could be a game changer - it effects a significant shift in my probability assignment to my various wave counts. Next week price movement becomes crucial.

Looking at the 15-minute interval chart as shown below, wave (ii) was completed on Monday and wave (iii) of C has started with mini wave 1 that ended on Thursday. Along wave C scenario of wave count, Friday's rebound has to be the mini wave 2. The maximum magnitude for mini wave 2 is a 100% retracement to 26,293 - Monday's wave (ii) closing price. That was only another 218 points up. Anything more than that will nullify my wave count of wave (i)-(ii), 1-2 of C of VIII.

But if Dow fails to go higher than 26,293 and instead it goes south and drops below the low of mini wave 1 of 25,536 then that is going to be the mini wave 3 of (iii) of C of VIII.

Mega wave (iii) Scenario

The 369 points gained on Friday has greatly improved the probability of this scenario despite the miserable outlook for Covid-19 pandemic, dropping GDP, business bankruptcy and miserable unemployment figures worldwide.

If Dow can continue with its Friday's momentum and break the 26,293 level, then mini wave 3 of its wave (v) of major wave 1 of mega wave (3) is on its way.

Do remember, besides these two wave counts, there are many other possible alternative wave counts as Dow slowly reveal its prices with time. Whatever wave counts proposed can be right or wrong but Elliott Wave Principles cannot be wrong as the final wave form can always fit into one of its principles.

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