New Range, Consolidation Formed.
From yesterday… “I have marked two dotted lines in that chart, which I call the Action Zone. I suggest watching for breaks of either line Friday – I would expect the resulting move to continue into Monday.”
So, what happened instead of a decisive break, was a formation of a new consolidation from 26,000 to 26,500. This is a Consolidation at Lows, which is Bearish, but now that we have this new, tight range, we are watching for a break of either line.
DJIA – 39 Minutes
The Daily Chat HAS been generally bullish but that is now in serious jeopardy since we have a tight Consolidation at Lows. We also note the existence of the two “Doji” patterns, back to back in the Daily Chart. These are negative signs. A continued push down below the new 26,000 Support Level will be quite negative, essentially setting us up for a fast move down to 25,000.
DJIA – Daily
In my last commentary, I talked about the Action Zone, “We have a clear Action Zone, which is simply a buffer around the Support Level. I think the breakout from that Zone is what is going to give us direction for the next 2-3 sessions.”
Well, the market STILL doesn’t know what it wants to do! Since we basically used those levels as boundaries for a new consolidation, we are back in the wait-and-see game, watching the lines at 26,000 and 26,500.
At some point, direction will be resolved – at least for the short term. The Medium and Long Term are just impossible to predict at this point, though the chart still indicates a bullish posture, based on the large Consolidation in the Daily.
Ed Downs
