In this blog we’re going to take a quick look at Dow 1 Hour chart from 10th May 2016. We can see Index broke the descending trend line from the peak suggest it most likely ended the cycle from 18173.54 high. Move up from 17580.38 to 17783.16 is a 5 wave move and hence we have labelled it as wave A. Elliott wave theory states that after a 5 wave move (unless 5 waves complete wave C of a FLAT structure), there should be a 3 wave pull back and another 5 wave move in the same direction. Therefore, we called for a pull back in wave B and another rally in wave C to complete a 3 wave bounce from 17580.38 low.
Here’s the 1 hour Asia updated chart of May 11th which shows Index made a 3 wave pull back (wave B as expected) and rallied again in 5 waves to complete 3 waves up from 17580.38 low (zig-zag structure) and then it was expected to turn lower again in line with the higher time frame wave count.
Below is the 1 hour chart from last weekend update and shows Index has already broken below 17580.38 low.
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