The Dow: Projecting the Probable Path of Price (Part 2)
12/16/2008 10:14 am EST
Let me zoom in on the section of the chart containing the up-sloping blue Median Line and its Parallel Lines, as well as the Energy Points.
This chart clearly shows the Energy Points above and below the current price. You can see that price rallied hard and tested the first Energy Point on the up side. You can also see the wide range bar lower that resulted once price tested the area of this Energy Point—the Energy Point area marked the end of the “Thanksgiving Rally.” After the wide range day lower, price consolidated for three days and then had a steep, two-day rally.
Note that the top of both of these rallies tested the blue up-sloping Median Line—which I marked clearly on the first chart. This tells me that the blue set of lines I added in late November is indeed showing me the probable path of price. Does that mean that the Dow has now begun a long- term rally? Hold that thought…
More tomorrow in Part 3…