As the index has now broken 13947 this has bearish implications on the index for the short – intermediate term. The last eleven trading sessions has seen the Dow struggle and consolidate at an important Fibonacci juncture which had been forecasted months in advance.
The current price structure is also suggesting that we could experience a decline lower to the August high of wave 1. This area also coincides with a minimum 38% retracement area of 13532. If this scenario plays out then wave 3 would be confirmed and after the wave 4 correction has been played out then further new highs may be in store ahead.
We also had a Fibonacci turn window of October 8th which although has passed by a 3 day overlap, can still count as a valid turning point.
Currently technical indicators such as the RSI is also suggesting that a divergence may have been setting up against the recent rally. This adds weight to the evidence that at least for the next week or so lower prices should be in store.
As oil prices climb higher, the indices may feel a pinch effect and traders should be alert to the correlation, which sometimes exist between these two factors. December Nymex could reach $87 - $89 and the sharp thrust higher will almost certainly push the Dow lower.
Lower prices for the Dow will be an opportunity for bulls as we approach one of the strongest periods of the year in November.
Sandy Jadeja is Chief Market Strategist for ODL Markets and founder of www.Spreadbettingtowin.com where he teaches low risk trading strategies and money management.