DOW JONES What signals the top of this Cycle?Dow Jones (DJI) has been on a highly systematic pattern ever since the 2009 bottom of the U.S. Housing Crisis and this chart on the 3W time-frame depicts very accurately the symmetrical nature of the Cycles that the index is going through in the past 15 years.
As you see, ever since the October 2011 bounce on both the 3W MA50 (blue trend-line) and 3W MA200 (orange trend-line), Dow started a hyper aggressive Bull Cycle, which after making a Top on each phase, it broke below the 3W MA50 to become a buy opportunity again but has never yet broken below the 3W MA200.
So far we have completed three such phases and we are currently on the 4th. In the three that have already been completed, the Top of the Phase was signaled by the RSI. At a certain point that it broke above the 70.00 overbought barrier, it started a Channel Down comprised of 4 legs (a through d). On the (d) leg, it gave a signal that Dow had (or is very close to) topped. That was the ultimate long-term Sell Signal. Similarly, when the index broke below its MA50 and the RSI double bottomed, it has been the ultimate signal to buy.
Right now it appears that the RSI has completed Leg (a) and is starting the rise to Leg (b) of its newly emerged Channel Down. That means that the market has around another 12 months before it Tops again.
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