Steep fall in past three days when Dow was down 12%, is taking a breather on Tuesday after hitting new 3 ½ month low at 23050, slightly below Fibo 38.2% of 17418/26683 (09 Nov 2016/29 Jan 2018 rally).
Bears are pausing on strongly oversold daily studies but recovery is so far holding below broken base of thick daily Ichimoku cloud (spanned between 23923 and 24482) which marks strong resistance and expected to maintain strong bearish pressure while recovery attempts stay below it.
The main question now is whether current pullback is just stronger correction of broader uptrend (which was so far contained by strong Fibo 38.2% support) or it is signal of reversal, which hasn’t been seen since 2008.
Weekly studies show room for further downside and extension of current pullback which may stretch towards psychological 20000 support at weekly 200SMA (18877) in extension).
Expect immediate bearish pressure to remain intact while recovery attempts stay below daily cloud, with stronger corrective action of 26683/23050 pullback to be signaled on sustained break above daily cloud which would also sideline the risk of further fall.
Res: 23923, 24212, 24482, 24930
Sup: 23652, 23500, 23205, 23050
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