Dow Jones – Weekly Review
If you read between the lines of the Dow Jones’ recent pullback, a fascinating story starts to unfold—one that sets it apart from every other major index. The structure of this decline is unique, and in this week’s analysis, we begin with DJIA, where the market might just be revealing its next big secret.
CANDLES
The Dow Jones closed the month with a bullish-neutral candle on Thursday but followed with a sharp decline on Friday. This drop resulted in a Bearish Engulfing on the weekly chart and confirmed a reversal on the daily frame. Momentum on the 2D and 3D charts is still forming, making the next 2–3 sessions particularly critical.
However, Friday’s move was so abrupt that several hourly frames became extremely oversold, raising the risk of a bounce—or even a full bullish reversal—over the next two days.
Despite the short-term weakness, all major trends remain intact to the upside. The short-term outlook is bearish, but the long-term perspective stays firmly bullish.
ELLIOTT WAVES
Long Term
(no change, just an updated chart)
I believe the Dow Jones is now positioned to follow the red path outlined in my long-term chart, last updated in December 2024. I’m keeping the original chart elements intact, as the current structure continues to align with that scenario. In this setup, wave 5 of the larger impulse could extend for a year or longer, potentially driving the Dow toward the $50,000+ level.
Road Map
The Dow Jones has most likely completed wave (iii) and is currently forming wave (iv), which has already met its minimum technical target. What stands out, however, is the internal structure of the decline. Upon close examination, the wave down is distinctly corrective.
While some may interpret the move as a leading diagonal or impulsive structure, Elliott Wave theory rules this out—specifically due to a clear violation: wave iii cannot be the shortest in an impulse. Instead, the current pattern aligns more closely with an expanded flat, where wave C extends approximately twice the length of wave A.
This suggests that the current pullback is corrective in nature, functioning as a consolidation phase before the next leg higher unfolds.
Inverse Head & Shoulders (IHS) & Flag
On June 24, I set the next major target for the Dow Jones at $49,600, projecting about a 15% gain from the $43,200 level. That target remains intact.
SUMMARY:
The Dow Jones remains bullish long term following the July monthly closure. The sharp pullback at the start of August is technically well-contained and has a high probability of ending quickly. The early part of the upcoming week will be critical, with strong potential for bullish signals that could mark a reversal.
Long-term trends and probabilities continue to support a solidly bullish trajectory.
As outlined in the June 1 Monthly Review: “The Dow Jones appears to be aligning with the red path shown in the long-term chart last updated in December 2024. If this scenario plays out, the index is currently in wave 5 of a larger impulse, which may continue for a year or longer and ultimately carry the Dow beyond $50,000.” This outlook remains valid following the July closure.
Happy Trading!
