Dow Fan Principle: Buy on third channel breakout; test coming!

2018년 8월 19일

Dow has charted a hammer spike candle formation with massive reaction after. Hope you got to play that round from earlier posts!

Now comes critical test time- breakout or fakeout? Failure to break channel upper trendline will lead to a precipitous decline- panic selling.

Gann fan shows of the prior breakout attempts from the flag channel, in April/May and June, turned back at 2/1 and 3/1 resistance zones.

Now index has charted a powerful bullish wave through the 4/1 zone and found strong support at nearly exactly Fibo 0.382 and leaped back into action- 8/1 final test this week, sure hope we get good grades!

Will it break out to upside or be pushed back into channel? Elliott wave analysis strongly suggests we have a (3) of (5) wave forming now which might have the power to carry index to ~26492 (see estimate derivation in prior post).

Technically, this is a Bear Flag formation and a likely outcome could be to break down from resistance at upper channel trendline:
speedtrader.com/how-to-trade-flag-patterns/

However it may still resolve to upside and the bullish impulse may be strong enough to breakout, if it does, as this is the third breakout, I'll buy into it!
tradingsim.com/blog/fan-principle/

tradingsim.com/wp-content/uploads/2011/06/fan-principle-example.png

I have examined the chart within channel and do not find a Gartley relationship in the past six weeks' trading pattern; the cup-and-handle pattern is evident, however.

As always, this is not investment advice and all comments are only intended for education and amusement. Good luck!

2018년 8월 19일

주문취소됨

My discovery of a Bearish Gartley formation leads me to cancel this idea, as appealing as it may seem, expect strong R3 at 25873 and look for bearish chart signals (risingwedge, headandshoulders) as index approaches trendline retest.

See: