Weaks Away?

(Pun intended). Is the Dow Jones Industrial Average, and its futures contract, shown below, days or weeks away from a major top? With 109 candles on the 8-hr chart, the pattern we posted in the comments of a prior post can still be playing out. It would be that of that overlapping expanding diagonal pattern with the 3-3-3-3-3 internal sequence, which is classified as a terminal pattern.

DJIA (YM) Futures - 8 hr - Expanding Diagonal

The three-wave sequences of a-b-c's are clearly shown. There is good form & balance with every numbered wave on an opposite side of the EMA-34. Nothing looks rushed, and we are trying to give the last wave as much time as it likes to play out because typically the waves expand "in time", too.

Sometimes, the last 'b' wave in this pattern will be a triangle. That can stretch the timing out some if the market wants. But the overlap seems like a key clue to this pattern. And there is a lot of room for algorithmic back-and-forth within its daily Bollinger Bands.

Unfortunately, I'd have to say that while a higher high often, and most usually results in this pattern, it simply does not have to if it is the true end of a larger pattern. The last wave can fail - which will also make it a bit of a cat & mouse game. But the (v)th wave has already exceeded the length of the (iii)rd and so the pattern is 'qualified' by the rules.

Further, also as previously noted, the expanding pattern shows up clearly in the waves of the Elliott Wave Oscillator (EWO or AO).

The b wave can be quite intractable, as usual, and it can be 'any three' including zigzags, multiple zigzags, flats, expanded flat or a triangle as noted.

But the last c wave, up, should be countable as a 'five' even if it truncates.

I'm really happy to see that the once mighty Dow, the once king of the indexes, has lost its following at this time, and everyone is all "NASDAQ & Mag10, and don't bother me with anything else." Maybe this once great index will still have a story to tell.

Have an excellent rest of the weekend,

TraderJoe