Technical Analysis: U.S Market Snapshot – Rebound is short-lived April 20, 2020 993

  • The S market had an unexpected recovery in late March and early April 2020.
  • On 13th March 2020, the expected rebound happened after price rebounded near 161.8% of the supposed wave 3.
  • The rebound was strong and the wave count was re-analysed.
  • We expect the market to have some upside despite the extenuating economic conditions. However, the upside should be short-lived with eventual downside potential.


The weekly chart shows a completed expanded flat corrective wave with price rebounded back to the 18,000s support zone. The subsequent rally has broken the support-turned-resistance level at 21,712.53.

Based on the current price action and wave analysis, there is a potential double-three corrective wave action. In other words, we might see the Dow Jones industrial Average range between 20,000 and 29,500 before falling off to stage an eventual rally around the 15,483.45 – 16,876.52 levels.


The 5-sub wave impulse leg of wave A was initially counted as 3 waves with the 5th wave yet to be completed. However, upon closer look, the 5th wave has since completed, ending at the 18,213.65 level. Subsequent price action suggests that the index may look to push towards the 25,210 region, which is the 61.8% of wave A and 161.8% extension of sub-wave (A). Should this level hold, we will see the beginning of another 5-sub impulse wave down. This means that the rising wedge formation may act as a catalyst to trigger the sell down.


However, there is possibility that the 61.8% and 161.8% might be broken. Should that happen, the price may continue its upside to 78.6% or 85.4% of wave A before the expected sell down.


To gauge how strong the move is for the Dow industrial, we will need the Transportation average to confirm the trend. Based on the transportation wave analysis, we can conclude that Transportation may end in a double-three corrective action. However, the difference is that the Dow industrial has completed its expanding flat while the transportation average has yet to complete as it has only complete wave iv.

With the Dow industrial making higher-highs on Friday, the Dow Transport remains weak. A sign of weakness remains, indicated by the weekly candle ending as a hanging-man near the resistance level of 8,636.79.


Amazon has been on the radar of traders despite the great sell-off happening elsewhere in the U.S market. With prices rallying beyond 2,300 in an almost straight-line rally fashion, the stock has shown a slowing impulse move that halted last Friday after it broke the 123.6% of wave A, closing with a long-legged Doji at the top of the trend.

As such, to enter long at this time into Amazon is highly risky and prices may correct itself. Based on the price action, the price may look to rebound at the support level 1 and traders should spot for reversal signals near the support level 1.


Microsoft has ridden the bullish rebound along with the Dow Jones Industrial Average. However, price action reveals that the bullish momentum is slowing after last Friday’s candle closed with a bullish hammer/hanging man at the top of the trend, which confluences with the 78.6% of wave A.

Entrants of long should look to the 165 region for support levels.

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