The Dow Jones Industrial Average is currently forming a contracting symmetrical triangle as part of a bigger Primary Degree Wave 3, indicating a bullish trend ahead. A key support level to watch is 45,728; staying above it keeps this positive outlook intact. The current pattern suggests a potential sharp price increase once the triangle is finished, with target prices between 49,347 and 51,726 based on Fibonacci extensions. This breakout is expected after Intermediate Wave (iv) wraps up, paving the way for Wave (v). RSI divergence shows a decrease in momentum during this sideways movement, which often happens in fourth-wave triangles. Typically, this pattern leads to a strong price movement matching the widest part of the triangle. As long as the Dow remains above 45,728, the preferred Elliott Wave count supports a rise into Wave (v) with a potential reaching between 49,000 and 51,000. If the Dow drops below 45,728, it may signal deeper corrections in the market. The Dow Jones Industrial Average appears to be consolidating within a developing triangle pattern, hinting that a significant move is on the horizon. This sideways price action is supported by decreasing trade volumes as we approach the holiday season. Key support remains at 45,728. For those looking to profit from the potential upward move, using long call options or bull call spreads on the DIA exchange-traded fund is a sensible strategy. The entry point would be a clear break above the triangle’s upper trendline, which is currently around 47,000. This optimistic view is bolstered by last week’s November CPI report, showing core inflation easing to 2.8%, nearing the Fed’s target. A disciplined strategy includes recognizing the key point for this bullish setup. A daily close below 45,728 would invalidate the triangle pattern and potentially lead to a deeper market correction. In such a case, traders would need to quickly exit bullish positions and might consider bearish strategies like long put options. The Federal Reserve’s choice to hold rates steady at their early December meeting supports risk assets. Additionally, we are entering a time that historically favors stocks, as the “Santa Claus Rally” often provides a seasonal boost in late December. This timing aligns well with the possibility of an upcoming breakout. We’ve also noticed the CBOE Volatility Index (VIX) compressing to around 14, pointing to a lack of immediate concern. Such low volatility levels often precede sharp price movements, suggesting that the market is gearing up for a significant shift. This means even small, out-of-the-money options could provide great returns if the anticipated breakout occurs.

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