US30 H4 Analysis: Bearish Wave (3) Breakdown Targets Fibonacci 161 and 261 Extension Zones

Introduction

The US30 (Dow Jones) has completed a Leading Diagonal formation before reversing sharply lower, confirming that bullish momentum has weakened significantly. The recent breakdown suggests the market has completed a corrective ABC structure, with Wave (C) likely finishing at the recent high.

The current Elliott Wave count indicates that a new bearish impulsive sequence has begun, with Wave 1 already completed and Wave 2 topping out before the expected decline into Wave 3.

Leading Diagonal Confirms Trend Reversal

Price previously formed a clear Leading Diagonal, often recognised as an early warning signal of an impending trend reversal.

After completing the five-wave diagonal, US30 failed to maintain its bullish momentum and reversed aggressively, confirming that sellers have regained market control.

The subsequent ABC corrective rally appears to have completed Wave 2, setting the stage for the next bearish impulse.

Wave (3) Expected to Accelerate Lower

Following the completion of Wave 2, the market is expected to enter Wave 3, which is typically the strongest and longest wave in an Elliott Wave impulse.

The projected downside target aligns with:

• The Fibonacci 161.8 Extension (first target).

• A corrective rebound into Wave 4.

• The Fibonacci 261.8 Extension, where Wave 5 is expected to complete.

This wave structure suggests a sustained bearish movement over the coming sessions.

Awesome Oscillator Supports Bearish Momentum

The Awesome Oscillator remains above the zero line but has started to lose upward momentum after reaching a recent peak.

This weakening momentum supports the view that buying pressure is fading and that bearish momentum may soon strengthen.

A decisive move below the zero line would provide additional confirmation that Wave 3 is underway.

Trading Outlook

The preferred scenario is for US30 to continue its decline after completing Wave 2.

Traders should monitor for:

• Strong bearish candlestick formations.

• Increasing bearish momentum on the Awesome Oscillator.

• Continuation below the recent swing low to confirm the Wave 3 decline.

A sustained move above the recent Wave 2 high would invalidate the current bearish wave count and suggest that the correction is extending further.

Conclusion

US30 has completed a Leading Diagonal followed by an ABC corrective rally, signalling that the broader bearish trend is likely resuming. The Elliott Wave structure favours the development of Wave 3, targeting the Fibonacci 161.8 Extension, before extending toward the 261.8 Extension as Wave 5 unfolds. Unless buyers reclaim the recent highs, the technical outlook remains bearish in the medium term.