DOW has given near about 67.35% retracement from its May top (May top & early June low), which is quite big. Thursday’s correction makes it more attractive. I don’t know whether lot of short-positions is created in 12800 level but I think we can get a hint of that in coming week.
Last few days movements suggest that there is a possibility of couple of small moves (like last day) in early days of the coming week. Therefore I cannot rule out another big correction (like this Thursday) in later part of the week at near about 12900 range. But this prediction may not be true if DOW struggles to break around 12750 level in early to middle of the coming week.
If DOW drops from this level then its initial support level will be around 12400 and the next one is at 12200. But as DOW is following higher highs and higher lows trend (in long-term chart) from year 2009 so if it still maintains that trend then I don’t think that DOW will test 2011 low levels. Around 11860 is the 50% retracement level (from October, 2011 low & May top) for DOW but if it goes more then 11507 is the 61.8% retracement level.
I am not completely satisfied with DOW’s movement after breaking out from short-term bullish pattern but to certain extent it is quite ok. I am confused about the medium term movement of DOW, still it has the option of both positive pattern and also the lower highs and lower lows trend.
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