Elliott Wave Analysis of the Dow Jones Industrial Average (YM futures contract) by Sid from ElliottWavePredictions.com

Elliott Wave Analysis of the Dow Jones Industrial Average (YM futures contract) by Sid from ElliottWavePredictions.com.  Click on the chart twice to enlarge.

My main Elliott Wave count for the Dow Jones Industrial Average (YM futures contract) is that 5 green waves down are complete from the July 5 high, with wave 5 green carving out an expanding ending diagonal.  The 5 green waves completed wave 1 pink, so wave 2 pink is likely underway, and should rise to the .318 to .618 Fibonacci retracement zone before wave 3 pink ensues to the downside, likely taking out the lower boundry line of the “rising wedge”, which has been slowing forming on textbook decreasing volume since late May.  As John J. Murphy describes in his book “Technical Analysis of the Financial Markets”, when the lower boundry line breaks, it should be accompanied by a substantial increase in volume, confirming the rising wedge pattern.  The downward movement following rising wedges is typically dramatic. 

Sid(e)-note:  Although the Rising Wedge is a well known bearish technical pattern, it was not specified as one of the patterns within the Wave Principle by R.N. Elliott. Mr. Elliott did recognize that 5 waves down followed by choppy overlapping upward movement into the Fibonacci retracement zone was bearish, quite especially so when wave 3 of 3 was the next expected progression within the larger wave count. He also used a pickup in volume as confirmation that a wave 3 of 3 was underway.

My alternate count is that there is one more slight high left in the tank, but because the latest swing high fell well short of the upper trendline of the wedge, another new high makes the alternate count less likely.