Dow Futures (YM) is on an upward trend, aiming for the 49,900 level. The cycle from the low in April 2025 is developing nicely with a clear structure. Wave (4) ended at 45,810, as shown on the one-hour chart. After that, wave (5) kicked off a new sequence of five smaller waves. Wave (i) climbed to 46,656, followed by a small pullback in wave (ii) to 46,165. The Index then rose in wave (iii) to 47,796, with a retracement in wave (iv) to 47,270. Finally, wave (v) pushed prices up to 48,184, marking the completion of wave ((i)) at a higher degree.

Elliott Wave Zigzag Decline

According to Elliott Wave theory, wave ((ii)) experienced a zigzag decline. After the peak of wave ((i)), wave (a) fell to 47,663, then wave (b) bounced back to 48,004. Wave (c) fell to 47,504, completing wave ((ii)). The Index then continued its upward movement in wave ((iii)). Starting from the low of wave ((ii)), wave (i) rose to 48,245, with a corrective pullback in wave (ii) ending at 47,859. The bullish cycle is expected to keep going as long as the low at 45,810 holds. The path for Dow Futures looks promising as it continues towards the 49,900 level, carrying on the impulse wave that began from the April 2025 low. The market structure appears bullish, and the recent drop to 47,504 likely marks the end of a minor correction. This indicates that the primary trend remains strongly upward as we approach the year’s end. Traders in derivatives should view this as a chance to buy on dips. Recent pullbacks, like the one to 47,859, are seen as entry points rather than signs of a reversal. Taking bullish positions, like buying call options or selling put spreads, during these corrective moments aligns with the ongoing upward trend.

Economic Data and Market Outlook

This technical strength is backed by recent economic data. The jobs report for November 2025, released last week, showed unemployment steady at a healthy 3.8%, surpassing expectations and indicating a strong economy. This fundamental support boosts our confidence in the market’s ability to rise. Additionally, the latest Consumer Price Index report for November 2025 showed an annual inflation rate of 2.5%, confirming that inflation is moderating. This solidified market expectations that the Federal Reserve will keep interest rates steady through the first quarter of 2026. A stable rate environment is beneficial for stocks. The key level to watch is 45,810, the low of the larger wave (4) structure. As long as we stay above this point, the bullish outlook remains valid, and traders should stay optimistic. A drop below this level would prompt an immediate reevaluation of our entire bullish perspective. We can draw parallels between today’s market actions and the strong year-end rally we saw in late 2023. During that time, hints of a dovish Fed pivot also sparked a significant rise in stock prices. Given this historical context, we could see buying interest increase as we approach the holiday season. Create your live VT Markets account and start trading now.

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