Fibonacci Targets

The Dow's higher all-time-high and The Eight-Fold-Path Method allow one to use Fibonacci ratios to project possible targets for the current up wave. I need to be clear, having made a higher all-time high, the Dow no longer needs to make a higher high. But Fibonacci ratios says it easily can and provides a target zone for this wave. From the perspective of The Eight-Fold-Path Method there are about 100 candles on the two-weekly chart, as below. So, the contracting diagonal count with a diverging Intermediate wave (3) is a highly probable wave count - especially if the S&P500 should make a new all-time high, too. The wave may finish in the 120 candle - 160 candle range.

DJIA Cash - 2 Week - Contracting Diagonal

From the Fibonacci perspective the simplest target is provided by the C wave of (3) at C = A around 38,469. This provides the lower end of the orange target zone. But we also note that there is a near-exact confluence of Fib levels at C = 1.272 x A, and (3) = 0.618 x (1). And that provides the upper end of the current range near 40,115 with a significant degree of probability. Higher than that is possible but then the diagonal might lose its shape and would have to be evaluated at that time.

For now, we keep the analysis simple and follow the method. We don't know how long a fourth wave, (4) and a fifth wave (5) could take in time but given the degree of the move it could be a while. Further, we must note in an ending contracting diagonal it is expected - but not required - that wave (5) make a further all-time high. Usually, they do. But the market could also fail that wave as a sign of a major top, too. So, stay tuned and let's see how it goes.

Have an excellent rest of the weekend and/or holiday if you are celebrating it,

TraderJoe