Dow Headed to 9,600?
June 7, 2010 in Analysis
The Dow Jones Industrial Average (ticker: $DJI) dropped sharply the last two trading sessions after topping out at 10,300 on June 3rd. As a matter of fact, the index has dropped 500 points and could be headed for a test of 9,600.
The Dow broke through the bottom of the ascending triangle pattern at 10,100 last Friday and has dropped about 300 points since the breakout occurred. I wrote about the triangle on June 2nd and mentioned the Dow was winding up for a major breakout opportunity that could be worth 500 points.
Since the breakout occurred at 10,100, we could see a continuation to 9,600 in the coming days (10,100 – 500 = 9,600).
Of course, the Dow is now holding at 8-month support at 9,800, which has been a major area of significance. If the Dow breaks through 9,800, much more weakness could be seen ahead. Therefore, 9,600 may be a modest target, while 9,000 could become a reality.
Keep an eye on 9,800 for signs of directional cues tomorrow. Any slight sign of weakness could easily lead to 9,600 being tested, thereby fulfilling our triangle’s target.
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