Is Dow Jones forming a large rising wedge pattern?

08/12/2020

US stock markets performed well in November, but since December, we see some consolidation in the Dow Jones index.

Nevertheless, cyclical stocks are roaring higher, despite new COVID restrictions, no stimulus, and the ongoing collapse of many cyclical sectors.

On Tuesday, the Dow index was down 0.30% ahead of the session, trading slightly below the critical 30,000 USD level.

The daily chart is starting to look like a large rising wedge pattern, which is a bearish reversal formation. Additionally, the index's inability to push above the 30,000 USD and stay there might also sound a bit bearish.

However, this rising wedge pattern would be valid after the price drops below the lower trend line, currently near 29,800 USD. That is the crucial support for now. The initial target of this pattern is at 29,200 USD, so circa 600 points, or USD.

Alternatively, if bulls reemerge and this bearish formation will not become valid, the first resistance seems to be in the 30,200 USD region. If not held, the Dow will rise to new all-time highs, and the next target for bulls might be at 31,000 USD.
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