Dow Jones finishes this year inside of a pennant formation
30 December 2022
Pre-Christmas and this week’s trading can be perfectly summarized by: “one day up, next day down”. In the past two weeks, Dow Jones was trading inside of the pennant formation (black), where almost every day was bringing us lower volatility, which naturally resulted with the bands of this pennant coming closer together with time.
Today we have a last day of trading in 2022 and it is hard to predict of Americans will decide to end the year with a breakout. Pennant is locked between the 23,6% (yellow) and the 38,2% Fibonacci (pink). Once the price will escape from the pennant, it will have to fight against one of those Fibonacci levels. In my opinion, this battle will be avoided in 2022 and we will have to wait till the new year to see that.
Price breaking the 23.6 Fibonacci would mean an instant comeback to the bullish trend. On the other hand, price breaking the 38,2% would mean a continuation of the downswing initiated by the triple top formation (grey) at the beginning of December, let’s wait and see which scenario will be picked by the smart money.