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Bullish Dow Jones Scenario Ahead of the US Elections

Dow Jones

The election day is here, and the Dow Jones bounced from the lows. Together with it, the entire stock market in the United States did the same.

Once again, the polls are divided. On the one hand, most national polls give Biden as a sure winner. On the other hand, the one poll that gave Trump as a winner in 2016 also suggests Trump will win in 2020.

With so much uncertainty, it is difficult to predict who will stay at the White House in the next four years. Because of that, many investors and traders turn to financial markets in the search for clues about the outcome of such an important event.

In this case, the Dow Jones forms a bullish pattern. Sure, the consolidation may not be over. Also, the triangle may still form, as we might have more of the e-wave to come.

But it does look like a running correction might end around the current levels, suggesting the extended wave is up next. The outcome? A bullish scenario for the Dow Jones.

The Winner Takes It All

The US elections process is pretty complex in the sense that the population votes, and the electors vote on the basis of the winner takes it all. It means that if a candidate wins a state, all the electors’ votes go to that candidate.

As such, it is possible that a candidate that did not win the popular vote, may be declared a winner. This makes this event such an important one because no one can predict the outcome.

Dow Jones Double Three Running

The double three running pattern implies one single x-wave as the intervening segment and a triangle at the end of it. The third wave in blue should be the extended wave.

Bulls willing to trade this pattern may want to wait for the Dow Jones index to break the b-d trendline before going long. If so, the invalidation comes at the end of the triangle and the target is 161.8% of the first wave, projected from the end of the second one.

Dow Jones Daily Chart