Dow Jones: Rising wedge has been triggered

21/12/2020

Monday has been a negative day for equities, and the Dow index was down nearly 2% ahead of the US session, trading at around 29,880 USD.

News about the new covid strain sent the risk assets sharply lower, although nothing is changing fundamentally. At least it should not. 

The daily chart looks like a very nice rising wedge pattern, which is a bearish reversal formation. The lower line of this triangle has already been broken to the downside, and if the index closes below it on the daily time frame, the bearish reversal might be confirmed. 

Therefore, the key level to watch for today's US session is the 29,920 USD support/resistance. 

If the index returns above that zone, we could see a quick rally back above 30,000 USD, and today's drop would be a false one. Alternatively, if bears are stronger, the next target could be near 29,200 USD.

The full potential of the rising wedge pattern is circa 1,500 USD. Thus it could drag the Dow Jones to 28,400 USD. 
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