Advertisement

A rare multiple tramline set-up on the Dow

The recent hyper-activity in the Dow has thrown up a very rare and exciting phenomenon, says John C Burford. Does the market hold any further surprises?

It's not often I write three days in a row. But the markets are thrilling right now and there are lessons to be learned.

So this is a very brief follow-up to yesterday's post on the Dow.

Today, I thought you'd be amused by this very unusual case where six tramlines are in play on the Dow. This is very rare.

Advertisement - Article continues below

Yesterday, I drew a tramline trio, marked T1, T2, and T3.

As the market fell hard in the afternoon, I could draw in more tramlines as usual, each one equidistant from the previous one.

Note how the market sliced through all of them including the most recent T4 and T5 but is respecting their placement, as every time, the market has come back for a kiss (blue, yellow and red arrows).

12-05-24-MWT-1

(Click on the chart for a larger version)

As I wrote this yesterday, the market had collapsed to hit T5 on the nose. The above chart was taken at around 3:30pm yesterday.

Advertisement
Advertisement - Article continues below

And here is the later chart showing the drop to yesterday's low right on T6. Remember, I could draw T5 and T6 when T1, T2 and T3 were in place!

12-05-24-MWT-2

(Click on the chart for a larger version)

Also remember, tramlines are targets, but not all tramlines are turning points.

Advertisement - Article continues below

Note also the attempt to kiss T5 after T6 was achieved. To protect profits, stops could be placed above the high marked by the green arrow.

So where now for the Dow?

Here is the situation this morning following the sharp late-day rally:

12-05-24-MWT-3

(Click on the chart for a larger version)

The rally carried right to the Fibonacci 76% retrace, at 12,508 another superb Fibonacci target hit to add to all those I have shown recently. And profits were locked in on the short trades taken at the 12,570 level.

Now the market is consolidating as I write. And note the possible A-B-C form to the rally, suggesting it may possibly have ended.

But with sentiment extremely bearish, there may be one more surprise' pop to the upside. To me, odds are even. But I would like to see a proper A-B-C, which would be achieved with a pop above 12,500. Will I get it?

If you're a new reader, or need a reminder about some of the methods I refer to in my trades, then do have a look at my introductory videos:

The essentials of tramline trading Advanced tramline trading An introduction to Elliott wave theory Advanced trading with Elliott waves Trading with Fibonacci levels Trading with 'momentum' Putting it all together

Don't miss my next trading insight. To receive all my spread betting blog posts by email, as soon as I've written them, just sign up here .

Advertisement
Advertisement

Recommended

Wayfair will lose its way – short it now
Trading

Wayfair will lose its way – short it now

The share price of Wayfair – the online homeware retailer – has bounced for no good reason. Short it, says Matthew Partridge.
11 Aug 2020
The pound has been trending higher against the dollar – will it last?
Sponsored

The pound has been trending higher against the dollar – will it last?

Sterling has been rising against the dollar. Dominic Frisby sets his trend lines in the charts to see where the pound is heading next.
10 Aug 2020
Can the recent rally in sterling continue?
Sponsored

Can the recent rally in sterling continue?

A "double top"  – a very recognisable pattern – is forming in in the US dollar. Dominic Frisby explains what it is, and what it could tell us about st…
3 Aug 2020
Stuart Wheeler : the granddaddy of spread-betting
People

Stuart Wheeler : the granddaddy of spread-betting

A lifelong obsession with gambling helped make Stuart Wheeler his fortune. By using that to back the Brexit campaign, he changed the face of British p…
2 Aug 2020

Most Popular

Eagle Lightweight GT: the reincarnation of the E-type Jag
Toys and gadgets

Eagle Lightweight GT: the reincarnation of the E-type Jag

Jaguar’s classic E-type sports car has been reinvented for the modern age. The result – the Eagle Lightweight GT – is a thing of beauty.
7 Aug 2020
Should you take advantage of the UK’s new breed of domestic holidaymakers?
Buy to let

Should you take advantage of the UK’s new breed of domestic holidaymakers?

With Britons choosing to holiday in the UK this year, the owners of the country’s holiday cottages are cleaning up. Should you buy in, too? Merryn? So…
10 Aug 2020
The pound has been trending higher against the dollar – will it last?
Sponsored

The pound has been trending higher against the dollar – will it last?

Sterling has been rising against the dollar. Dominic Frisby sets his trend lines in the charts to see where the pound is heading next.
10 Aug 2020