DJI Elliott Wave forecast: Rolling over
The rally from March 30 to May 1 formed a clear Elliott wave impulse pattern. This signals that a multi-week correction may have begun from 49,988. The first leg lower of the correction trended to 48,913 shaping wave (a) or (i). Now, the rally up to todays high is a portion of wave (b) or (ii). There is a small price gap that the current rally may try to jump up and fill. These gaps can act like magnets and eventual resistance in a downtrend. The gap is carved between 49,441 – 49,497. Therefore, DJI may top in that price range, then begin to dig lower in wave (c ) or (iii). The downside targets range is 47,758 – 48,409 with even lower levels possible. Embedded within this target price range is the 38% Fibonacci retracement level. It is likely the market will have a bullish reaction in this zone. Then well reassess how mature the downtrend is. Bottom Line The DJI appears to have completed its first bearish wave lower with another secondary leg down just around the corner. DJI may rally to fill the gap between 49,441 – 49,497 and create a secondary high. Once the next leg lower begins, we forecast it will