Dow Jones Index enters range but remains bullish and aims at $36-38k

• Dow Jones Index (US30) has been taking a few weeks break since its last high. But the consolidation zone is simply going sideways, which is a bullish signal.

• A break above the 21 ema high could confirm a bullish breakout and the end of the wave 4 and start of wave 5. The main targets are $36,600 and $38,000.

This article reviews the bullish scenarios, targets, and invalidation levels.

Price charts and technical analysis

The US30 daily chart has been in a strong uptrend. All of the moving averages are neatly aligned with lots of space in between. This indicates a strong momentum and trend:

1. The bullish price swing is therefore likely some type of wave 3 (grey).

2. Considering the overall uptrend strength, the wave 3 is probably a wave 3 on a higher degree (pink/purple).

3. The current sideways consolidation fits well within the expected wave 4 (grey) pattern.

4. A break above the 21 ema high could confirm a bullish breakout (blue arrow) and the end of the wave 4 and start of wave 5 (grey).

5. A break below the support trend line (green) and 21 ema low could indicate a pullback (orange arrow).

6. The pullback will test the previous low or 38.2% Fibonacci level where a bullish bounce is expected (green arrows).

7. A deeper pullback places the wave 4 (grey) on hold (orange circle) and a very deep retracement invalidates it (red circle).

8. The main targets are $36,600 and $38,000.

On the 4 hour chart, price action is testing the long-term moving averages:

1. A bearish breakout (orange arrows) could indicate a deeper wave C (green) within wave 4 (grey).

2. The main targets for the bearish wave C (green) are the Fibonacci levels where a bullish bounce could take place (green arrow).

3. A bullish breakout (blue arrows) could indicate an immediate uptrend continuation. 

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The analysis has been done with the ecs.SWAT method and ebook.