DJIA long term [2017 - 2022] forecast (wave analysis)
In 2000-2009 a big correction pattern took place. (C) = 161.% of (A)
In 2009 a big bull market began.
5th(purple)wave = 100% 1st one = 18267, which completed ||| wave extention.
Now DJIA is inside V wave of (|||).
short-term buy targets to (3) red wave are: 21295(major) and 22291, which might be reached in March.
after that I expect sideways/bear market, which might end itself in autumn 2017.
then I expect a bull market, which should complete V (green) wave in 1st half of 2018.
target is 23907.
then I expect a big bear/sideways market to occur, which might end itself in late 2019 - 1st half of 2020.
during that bear market price should drop to range.
after that I expect 2-3 years of bull market (2020-2022)
possible target is 24700
In 2009 a big bull market began.
5th(purple)wave = 100% 1st one = 18267, which completed ||| wave extention.
Now DJIA is inside V wave of (|||).
short-term buy targets to (3) red wave are: 21295(major) and 22291, which might be reached in March.
after that I expect sideways/bear market, which might end itself in autumn 2017.
then I expect a bull market, which should complete V (green) wave in 1st half of 2018.
target is 23907.
then I expect a big bear/sideways market to occur, which might end itself in late 2019 - 1st half of 2020.
during that bear market price should drop to range.
after that I expect 2-3 years of bull market (2020-2022)
possible target is 24700
Trade active:
DJIA lost 12.23% in recent 2 weeks. it was the biggest drop in recent years.
and it began right on time, when the end of V (green) wave, which completed (III) (blue) wave structure, were predicted to be. - (January 2018)
Targets:
I used 261.8% extension of (green) wave I as a major target for (green) wave V - 23907.
361.8% target is 27142
In fact, price reached 361.8% extension of (blue) wave (I) - 26763.9.
So (blue) wave (III) is 361.8% of (blue) wave (I)
This biggest drop in recent years might began major (blue) wave (IV).
Price may fall in 15400-18300 area in 2 next years.
About (green) wave V structure:
On 26 feb 2017 wave (3) (red) was almost formed. (time when idea was published)
Wave (4) (red) was expected to be more complex and bigger.
It broke trendline of wave (3) (red), but there were no expected drop in price and time. So (red) wave (5) started earlier.
161.8% target for (red) wave (5) based on (red) wave (3) extension is 27134, which is close to 2 other targets based on waves of greater degree: (I) and I.
So there are strong evidences that DJIA reached its peak for recent years:
- biggest drop in recent years. - 12.23% in 2 weeks.
- multiply targets are reached
- price broke trendline of (green) wave V.
- standart deviation on daily chart is more than 2 times bigger than it was anytime during 2016-2017 bull market (wave V) and even bigger than StdDev 5 on 24.08.2015 (black Friday on stock market) Watch the chart!
(log scale chart)
and it began right on time, when the end of V (green) wave, which completed (III) (blue) wave structure, were predicted to be. - (January 2018)
I used 261.8% extension of (green) wave I as a major target for (green) wave V - 23907.
361.8% target is 27142
In fact, price reached 361.8% extension of (blue) wave (I) - 26763.9.
So (blue) wave (III) is 361.8% of (blue) wave (I)
This biggest drop in recent years might began major (blue) wave (IV).
Price may fall in 15400-18300 area in 2 next years.
About (green) wave V structure:
On 26 feb 2017 wave (3) (red) was almost formed. (time when idea was published)
Wave (4) (red) was expected to be more complex and bigger.
It broke trendline of wave (3) (red), but there were no expected drop in price and time. So (red) wave (5) started earlier.
161.8% target for (red) wave (5) based on (red) wave (3) extension is 27134, which is close to 2 other targets based on waves of greater degree: (I) and I.
- biggest drop in recent years. - 12.23% in 2 weeks.
- multiply targets are reached
- price broke trendline of (green) wave V.
- standart deviation on daily chart is more than 2 times bigger than it was anytime during 2016-2017 bull market (wave V) and even bigger than StdDev 5 on 24.08.2015 (black Friday on stock market) Watch the chart!
Comment:
if price moves beyond 24850, primary alternative is a flat correction of 26621-23368 price movement.
Trade active:
Well, 5 waves structure of wave (C) looks like completed.
its trend line is broken.
if it's right, DJIA is expected to resume its downfall trend.
I will prefer to wait till price falls below 1 std of 24 or 50 MA on daily chart for additional confirmation. Now it's just few pips above one with 24 period.
Price is below 1 std of ma24 and ma50 on H4 chart.
Keep an eye on it!
Big picture:
Long term sell targets: 20115, 22133, 23381 are based on fibo extensions of winter drop in DJIA.
its trend line is broken.
if it's right, DJIA is expected to resume its downfall trend.
Price is below 1 std of ma24 and ma50 on H4 chart.
Keep an eye on it!
Big picture:
Comment:
As I told, upward correction can bring price above historic high.
That's what actually happened.
Price exceeded all time top and dropped fast.
here is big picture:
bear market is expected to last for a long time.
detailed picture:
next drop is expected after correction pattern is completed.
1) alternative presents us a running flat, which can be already formed.
2) alternative assumes that wave b is a wave 5, which is an ending part of 5wave impulse. so a-b-c correction pattern is far from being formed.
That's what actually happened.
Price exceeded all time top and dropped fast.
here is big picture:
detailed picture:
next drop is expected after correction pattern is completed.
1) alternative presents us a running flat, which can be already formed.
Trade active:
as you see, my forecast works well.
161.8% - 21683$ target is close.
next target is 261.8% - 18436$.
I found an old chart with my original drawings.
how close my forecast was to actual price movement...?
my original analysis suggests that this bear market should end in late 2019.
it also accurately predicted the month of the end of big bull market - jan 2018.
now I've reconsidered my analysis:
if my assumption is right and this current bear market is wave (IV), which corrects wave (III) , we should expect bear market to last till late 2020.
if this current bear market corrects wave V , we should expect bear market to last till may 2019 or dec2019.
current price - 22445 is 38.2% retracement of this movement
161.8% - 21683$ target is close.
next target is 261.8% - 18436$.
I found an old chart with my original drawings.
how close my forecast was to actual price movement...?
my original analysis suggests that this bear market should end in late 2019.
it also accurately predicted the month of the end of big bull market - jan 2018.
now I've reconsidered my analysis:
if my assumption is right and this current bear market is wave (IV), which corrects wave (III) , we should expect bear market to last till late 2020.
if this current bear market corrects wave V , we should expect bear market to last till may 2019 or dec2019.
current price - 22445 is 38.2% retracement of this movement
Trade closed: target reached:
161.8% - 21683$ target is reached.
actual price dropped to 21712.5 and then bounced back by 5.3%
what next?
1) bear market is done and we should expect further surge of DJIA price.
2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction.
actual price dropped to 21712.5 and then bounced back by 5.3%
what next?
1) bear market is done and we should expect further surge of DJIA price.
2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction.
Comment:
DJI has already surged 18%, showing the best 7 weeks since 2009.
historic data:
8% - DJI average annual growth;
17% - average annual growth from 2009 to 2018.
25% - average annual growth from 1921 to 1929
10% - average annual growth from 1932 to 1966
13% - average annual growth from 1975 to 2000
15% - average annual growth from 2009 to 2019.
39% - average annual growth from March 2009 to April 2011.
30% - average annual growth from January 2016 to January 2018.
looks like DJI is breaking out of the corrective structure.
clear breakout should confirm further upward trend.
rapid surge also supports uptrend forecast.
we have a complete correction pattern, which tells us, that new uptrend is ready to go, but there is also a chance that this (RED) A-B-C is just a single wave in bigger downward move.
Estimating price targets is a tricky deal.
I consider 34000 as a reasonable target for next 2 years of course if this correction is indeed over. (estimated CAGR will be 25%)
historic data:
8% - DJI average annual growth;
17% - average annual growth from 2009 to 2018.
25% - average annual growth from 1921 to 1929
10% - average annual growth from 1932 to 1966
13% - average annual growth from 1975 to 2000
15% - average annual growth from 2009 to 2019.
39% - average annual growth from March 2009 to April 2011.
30% - average annual growth from January 2016 to January 2018.
looks like DJI is breaking out of the corrective structure.
clear breakout should confirm further upward trend.
rapid surge also supports uptrend forecast.
we have a complete correction pattern, which tells us, that new uptrend is ready to go, but there is also a chance that this (RED) A-B-C is just a single wave in bigger downward move.
I consider 34000 as a reasonable target for next 2 years of course if this correction is indeed over. (estimated CAGR will be 25%)
Trade active:
On Dec 27, 2018 I assumed 2 main alternatives for DJI trend in update to this publication.
On last Friday it became obvious for that 2nd alternative is in play. (most probable outcome)
"2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction." — Dec 27, 2018
Price action overview: Here we have an ABC (red) expanding flat pattern.
wave A (red) consists of abc (blue) expanding flat pattern. c = 161.8% of a
wave B (red) consists of abc (blue) zig-zag pattern. c = 61.8% of a
wave B (red) equals 61.8% of wave A (red) in time scale.
Forecast: I consider DJI to drop 29% of its peak value and reach 19463 in late November - early winter. wave C (red) to be 161.8% of wave A (red).
DJI should drop at least to 20423 (38.2% correction of October 2011 — January 2018 price trend)
alternative wave count:
entire structure can be also described as A-B-C-D-E expanding triangle pattern.
wave D = 161.8% of wave B
in this case forecasted price target would be almost the same — 18921. 31% drop.
On last Friday it became obvious for that 2nd alternative is in play. (most probable outcome)
"2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction." — Dec 27, 2018
Price action overview: Here we have an ABC (red) expanding flat pattern.
wave A (red) consists of abc (blue) expanding flat pattern. c = 161.8% of a
wave B (red) consists of abc (blue) zig-zag pattern. c = 61.8% of a
wave B (red) equals 61.8% of wave A (red) in time scale.
DJI should drop at least to 20423 (38.2% correction of October 2011 — January 2018 price trend)
alternative wave count:
entire structure can be also described as A-B-C-D-E expanding triangle pattern.
wave D = 161.8% of wave B
in this case forecasted price target would be almost the same — 18921. 31% drop.
Comment:
short-term overview
here we have possible price action scenario.
short-term upward correction of bigger downward trend.
advice: don't get overexcited with current rebound in stock prices, it may end very soon and be followed by greater sell off.
general downtrend assumption presumes 27400 NOT to be broken. it's ultimate stop loss for this idea, invalidation criteria.
here we have possible price action scenario.
short-term upward correction of bigger downward trend.
general downtrend assumption presumes 27400 NOT to be broken. it's ultimate stop loss for this idea, invalidation criteria.
Comment:
short-term overview
advice: don't get overexcited with current rebound in stock prices, it may end very soon and be followed by greater sell off.
1st possible level to start sell off has been reached.
as a result, it may be that! the start of big wave down.
break below lower band of median line will confirm the move.
if not, price may cruise to 27060 — 2nd considered level, before anticipated sell off triggers.
1st possible level to start sell off has been reached.
as a result, it may be that! the start of big wave down.
break below lower band of median line will confirm the move.
if not, price may cruise to 27060 — 2nd considered level, before anticipated sell off triggers.
Comment:
DJI tickers which I had used before miss huge chunk of trading data, as a result short-term and intraday tech analysis are heavy skewed.
to overcome this problem I used an other ticker — DJI futures. It includes non-US trading hours data.
SHORT-TERM overview
here we have a forming (a)-(b)-(c) pattern.
wave (c) should complete a 5 wave pattern.
estimated target for wave (c) is 26638.
when wave (c) is completed, a "Big Short" is expected. Really BIG!
27401 is ultimate stop loss for this "Big Short" idea.
to overcome this problem I used an other ticker — DJI futures. It includes non-US trading hours data.
SHORT-TERM overview
here we have a forming (a)-(b)-(c) pattern.
wave (c) should complete a 5 wave pattern.
estimated target for wave (c) is 26638.
when wave (c) is completed, a "Big Short" is expected. Really BIG!
27401 is ultimate stop loss for this "Big Short" idea.
Comment:
here is more precise chart:
Comment:
the daily overview
— sometimes I wonder how accurate my estimates are.
yesterday, I published the short-term update, where I anticipated the final wave 5 (move up) to finish wave (c) to start The Big Short.
the approximate estimation of wave 4 end appeared to be only 4 point higher than actual price and 15 minutes earlier in time.
short-term overview:
as I expected yesterday: DJI is forming wave 5 now.
price should reach 26638 price level.
when such action take place, The Big Short is expected.
advise: you may adjust your trading plan according to this assumption about expected price action.
good luck!
PS: since Friday I fixed only 2.5% profits on DJI short and 0% on DJI long trade, which occurred yesterday.
both trades caught stop loss:
short trade was closed at 26350 (ask price rise stopped at 26370)
long trade was closed at 26034 (bid price dropped to 26004, before it stared surging to 26380)
I could fix 14.5% in profit instead of only 2.5%.
shame. not lucky week for me so far.
— sometimes I wonder how accurate my estimates are.
yesterday, I published the short-term update, where I anticipated the final wave 5 (move up) to finish wave (c) to start The Big Short.
the approximate estimation of wave 4 end appeared to be only 4 point higher than actual price and 15 minutes earlier in time.
as I expected yesterday: DJI is forming wave 5 now.
price should reach 26638 price level.
when such action take place, The Big Short is expected.
good luck!
PS: since Friday I fixed only 2.5% profits on DJI short and 0% on DJI long trade, which occurred yesterday.
both trades caught stop loss:
short trade was closed at 26350 (ask price rise stopped at 26370)
long trade was closed at 26034 (bid price dropped to 26004, before it stared surging to 26380)
I could fix 14.5% in profit instead of only 2.5%.
shame. not lucky week for me so far.
Trade active:
THE BIG SHORT
here we go.
desired target 26638 has been reached. (price hit 26684)
anticipated wave 5 has been formed.
we can assume that wave (c) of (a)-(b)-(c) corrective pattern has been completed.
if our assumption is true, The Big Short is expected.
it's time to look for a SELL SETUPs to catch a Real Big move down.
mid-term sell target to consider: 22854, 24317, 20487.
now I view this (a)-(b)-(c) corrective pattern as a wave 2 of a forming 5 wave structure, which in the end should bring DJI to 19463 — 18921 level.
as a result I consider 22854 as the most likely target for wave 3.
then in ideal scenario it should be corrected by wave 4 and followed by final sell off — wave 5.
Well!
this is my game plan.
trade decision is up to you, comrades.
good luck!
PS: I'm already in at 26656.
here we go.
desired target 26638 has been reached. (price hit 26684)
anticipated wave 5 has been formed.
we can assume that wave (c) of (a)-(b)-(c) corrective pattern has been completed.
if our assumption is true, The Big Short is expected.
mid-term sell target to consider: 22854, 24317, 20487.
now I view this (a)-(b)-(c) corrective pattern as a wave 2 of a forming 5 wave structure, which in the end should bring DJI to 19463 — 18921 level.
as a result I consider 22854 as the most likely target for wave 3.
then in ideal scenario it should be corrected by wave 4 and followed by final sell off — wave 5.
this is my game plan.
trade decision is up to you, comrades.
good luck!
PS: I'm already in at 26656.
Comment:
DJI short-term trend is extremely bullish.
looks like DJI is about to break 27400 level, which is ultimate stop loss for the current Big Short idea.
it may be viewed as great risk/reward opportunity to short DJI / stocks now.
However, if DJI breaks 27400, entire Big Short idea will become invalid.
in this case there are 2 alternatives (updated version of alternatives that were published on 27 December 2018 in update to DJIA long term forecast (wave analysis):
1) bear market is done and we should expect further surge of DJIA price.
2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction.
1) ABC(red) is a complete bear trend, as a result DJI should form a new long-term bull trend lasting approximately 2years.
(a)-(b)-(c) (green) is just a minor running flat correction inside a new bull trend, where (c) is 100% of (a).
2) ABC(red) is not a complete bear trend (correction) structure.
currently wave B (red) is being formed, which is expected to consist of ABC (circled yellow) zig-zag pattern.
wave B(red) is expected to last 100% of the time that wave A(red) lasted.
after wave B(red) is formed, The Big Short (wave C (red)) should be anticipated.
I suppose it's a complete DJI wave analysis by now.
looks like DJI is about to break 27400 level, which is ultimate stop loss for the current Big Short idea.
However, if DJI breaks 27400, entire Big Short idea will become invalid.
in this case there are 2 alternatives (updated version of alternatives that were published on 27 December 2018 in update to DJIA long term forecast (wave analysis):
1) bear market is done and we should expect further surge of DJIA price.
2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction.
1) ABC(red) is a complete bear trend, as a result DJI should form a new long-term bull trend lasting approximately 2years.
(a)-(b)-(c) (green) is just a minor running flat correction inside a new bull trend, where (c) is 100% of (a).
currently wave B (red) is being formed, which is expected to consist of ABC (circled yellow) zig-zag pattern.
wave B(red) is expected to last 100% of the time that wave A(red) lasted.
after wave B(red) is formed, The Big Short (wave C (red)) should be anticipated.
Comment:
DJI short-term overview
1) alternative:
until 27400 is not broken, the bearish view is our priority scenario in mid-term.
it's assumed that price made 1st wave to the downside after completing wave (c) on September 12th; and now wave 2 is forming, which is supposed to consist of a-b-c flat, where waves "a" and "b" has already been formed and wave "c" is in a process of forming.
if this assumption is right, here we have mid-term sell targets: 23541.
2) alternative:
on the other hand this structure may be considered as a bullish flag.
and DJI is preparing for breaking 27400.
1) alternative:
until 27400 is not broken, the bearish view is our priority scenario in mid-term.
it's assumed that price made 1st wave to the downside after completing wave (c) on September 12th; and now wave 2 is forming, which is supposed to consist of a-b-c flat, where waves "a" and "b" has already been formed and wave "c" is in a process of forming.
on the other hand this structure may be considered as a bullish flag.
and DJI is preparing for breaking 27400.
Trade active:
as we see, The Big Short idea is coming true.
main (1) alternative, which was published on Monday, October, 1, has come true.
DJI reversed to the downside after reaching 1st of 2 suggested pivot points: 27074, 27293.
In addition to long-term sell target 19463 and mid-term sell target 23541 we may consider additional short-term sell targets 26110, which is based on wave 1 (yellow) 161.8% extension, and 25518 (261.8% extension) as more aggressive target.
main (1) alternative, which was published on Monday, October, 1, has come true.
DJI reversed to the downside after reaching 1st of 2 suggested pivot points: 27074, 27293.
Trade closed: target reached:
What if we are looking at running triangle?
wave E = 61.8% of wave C.
after reach this approximate level, DJI energetically bounced back regaining 26000.
Facebook already stopped falling yesterday. the exact same pattern occurred on December, 26.
after reach this approximate level, DJI energetically bounced back regaining 26000.
Facebook already stopped falling yesterday. the exact same pattern occurred on December, 26.
Trade active:
Long-term targets to consider: 38000 - main target. 31800 - conservative one.
DJI price action confirmed my assumption about the continuation of long-term bull trend, which were made on October, 3rd, 2019.
since October, 3rd (when new upward trend was established) DJI surged 9.8% under-performing S&P500 (+11.3%)
I expect a 75% rise in 2-3 years. bull market (wave (5) red) should be completed in spring 2021 or in summer 2022 (less likely)
since 3rd, October I returned to the 1st of 2 assumptions I made on December 26, 2018: "1) bear market is done and we should expect further surge of DJIA price. 2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction."
Regarding "bear market" under 1st assumption: I meant wave (4) red) which consists of ABC (red) expanding flat pattern.
since October, 3rd (when new upward trend was established) DJI surged 9.8% under-performing S&P500 (+11.3%)
I expect a 75% rise in 2-3 years. bull market (wave (5) red) should be completed in spring 2021 or in summer 2022 (less likely)
since 3rd, October I returned to the 1st of 2 assumptions I made on December 26, 2018: "1) bear market is done and we should expect further surge of DJIA price. 2) bear market have just completed 1st wave of bigger drop. so price might continue downward move after a reasonable correction."
Regarding "bear market" under 1st assumption: I meant wave (4) red) which consists of ABC (red) expanding flat pattern.
if it is true, wave e should not move beyond wave c (24850).
estimated sell targets: 22729, 21482, 19464. (should be updated when triangle is clarified)