The Dow Jones index trades with little or no direction lately. It could be that this is just complacency ahead of the end of the year. Or, the market simply waits for the Fed next week. But no matter the reason why the Dow consolidates, the pattern looks like a rising wedge. Moreover, the lower edge of the pattern is about to break if we judge by where the price is now.
Yesterday’s initial jobless claims in the United States revealed a weak job market. More precisely, the report showed that the recovery lost its momentum, so the stock market may have a hard time making new highs.
The optimism so far was driven by progress on the vaccines front and encouraging signs from the economic recovery. However, to reach results through vaccination, the world needs plenty of time to have herd immunity.
Dow Jones Rising Wedge
A rising wedge is a bearish pattern. As such, a break below the lower edge spells troubles for bulls. Bears may want to get on the short side and ride the new bearish trend all the way until the lowest point in the wedge formation. This means targeting 28,900 while having a stop-loss order at the recent highs for an appropriate rr ratio.
Dow Jones Price Forecast
