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DOW started its descent with a "bang" of more than 600 points yesterday after breaking the red trendline. It has also broken the Support1 which was not marked earlier. In addition, it has created a new candlestick Gap3 as shown.
With the creation of Gap3, the following options become available:
1. Cover up Gap 3 immediately;
2. Cover up Gap 1 before covering Gap 3;
3. Proceed to cover up Gap1, and test the other supports to cover Gap2 before coming back up to cover Gap 3;.
From the observations of the other trending charts, it would appear that the traders were creating Gap3 for the purpose of returning back after having covered Gap2. Also, if they wanted to cover Gap3, they would have already done so during the trading session.
The observations also support option 3 to be a likely trading option at the moment unless another incident like the "2008 Lehman Brothers" event were to happen again.
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20 August 2022
The US stock has reached the overbought region and is ready to make a descent. The descent will start as soon as DOW breaks the red trend line as shown. Thereafter, it will try to cover gap 1 and test the support @32,387 as shown.
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