Dow dropped 185 points (1.45%) to close at 12570 level on Wednesday. With that, Dow has gone below its short-term lower resistance line (red line by joining point (ii) and (iv)). It confirmed that major wave (5) has only 5 waves. Thus, possibility 1 can be eliminated.
Next is possibility 2 where the mega wave 1 may have 9 major waves as shown below.
Major wave (6) may end around 12,000 level, staying on top of the longer term resistance line (green line by joining (2) and (4)).
This possibility 2 can only be eliminated if Dow drops below 12,000, by then we will left with only possibility 3 where mega wave 1 has ended and mega wave 2 has started.
The minimum target for mega wave 2 is the 10655 level, the low of major wave (4). The maximum pullback is the scenario of a 100% retracement to the starting point of mega wave 1, the 6547 level.
At this moment I am going to focus on possibility 2 and the 10655 support level until such time when Dow goes below the 10655 level and possibility 2 is eliminated.
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