In our October update on the Dow, I noted how the white .786 Fibonacci retracement at 17,712 represented not only a legitimate harmonic reversal point, but the intersection of rising and falling channels.

But, I also reminded members that:

…the Dow is one of the least reliable indices to forecast using patterns and Fibs.  It’s just too easily/heavily manipulated.

The reminder was timely.

continued for members…
DJIA not only popped out of the falling purple channel in order to (within 33 points) complete a Bat Pattern, but it has dropped below it not once, but twice since the Nov 3 high. Note that the latest decline stopped just above the Nov 16 lows and stayed within the rising red channel bounds — meaning the trend remains nominally positive.  The SMA100, just below at 17160, is also a nominally positive sign.

There are few other indices which are poised so precariously on the edge of support.  The upshot?  A remarkably reliable line in the sand to judge if/when this unreliable index is in trouble.

Stay tuned.