Dow Plunged 323 points (3.2%) on Friday

Dow plunged 323 points (3.2%) on Friday as investors worried that US economy might be pulled down by the European Union. European markets have closed lower by about 2% before the starting of the US market on falling Euro, Hungary's woes, French Bank's derivative's problem and downgrading of European markets by HSBC Bank.



Dow plunged through the 9974 level to close at 9931, that means the last rebound before the plunge is sub-wave vi, wave A has not been completed yet.

Since wave A can take the form of either 5 waves or 3 waves according to Elliott Wave Principle, wave A can end at sub-wave vii and it can also end at sub-wave ix.



In a higher degree correction, wave (IV) level, in this case the 9908 level usually can provide a strong support to the first down wave. This 9908 level can be a possible level for wave A as shown by the above chart where wave A has only 7 sub-waves. Under this scenario, the previous wave (III) level at 10725 can be the resistance level for wave B. There is a potential Head and Shoulders formation. Once Head and Shoulders is formed, Dow may have to drop until 8500 levels as its minimum target.



Next week if wave (IV) level of 9908 is broken, Wave A is likely to have 9 sub-waves as shown above or have more sub-waves.