DJIA has reached 61.8% retracement relative to the May-June 5 wave decline. The form of the rise is still in 3 waves as expected. This could very well be an intermediate to long term top if this move does not unfold another 4th and a 5th wave upwards.
Our target of 61.8% has been achieved and it's time now to be vary careful. With a Bernanke-FED speech later today, things can turn really ugly if markets expect QE3 and none is offered. This price level could mark the end of wave II as depicted in the daily chart above. The move is almost or already finished.
In the intraday chart you can see that wave C could very well be finished. Support lies at the upward sloping trend line and prices should not overlap wave A high. If prices fall towards level A with an impulsive manner, then we could expect the June lows to be tested. This bearish scenario is the strongest one. For bulls to increase their chances of survival, then the market must finish 5 waves upwards from June lows and eventually make new highs above 13300. Support of 12400 should hold and not be broken before 5 waves up are finished.
Long positions should be alerted if market moves below 12700 in impulsive waves. Short positions could be opened now but this decision solely depends on the risk profile everyone has, since the stop for bears right now is 13300. If 5 waves down are developed and support levels are broken, then we can lower the stop for the bears to the last high.
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