Technical Analysis of Financial Markets

Sunday, September 10, 2006

Dow Jones - Bearish Rising Wedge

The Dow looks as though it has completed a Rising Wedge formation. This pattern is bearish and usually occurs on diminishing volume. Textbooks suggest that the pattern must have at least five touches; – that is, tests of the support and resistance trend lines should occur at least five times in total. Volume should increase as the breakdown increases in magnitude. It’s typical to see a 5% decline in price after the wedge formation. Should this hold true, a price target of 10,925 may be a possibility. Watch Fibonacci retracement levels for support.

1 comment:

Anonymous said...

Hi Steve,

This market has been flying the last month. I've been noticing alot of divergences though.

What do you think about BEN?