Is Strong Weekly Rally In US Markets Convincing Enough?

US markets had another splendid day of trading, with bulls raging all the way. Dow closed with gain of 128 points and in the process exhibited some resolute buying action in second half of  trading session. The past week saw US markets register a strong rally after a long time. But since Dow closed at 16805, it is considered to be moving inside the correction zone of 16600-16900. Hence it is still susceptible to correction.

However in the end, markets will be markets. For all you know Dow can make a V-shaped recovery without much of a correction and go beyond its all time high. It is a possibility, even though a remote one. For taking action in the US markets traders need to weigh in all the possibilities and trade accordingly. That sounds quite cliched! Hence to qualify and quantify my statement I am going to discuss various levels possible in Dow and recommend action for successful trade.

From the present position Dow can move in the following possible ways :-

1. Dow keeps moving northwards without any correction and reaches level of 17350 (its all time high). This situation is highly improbable. But if that happens then one can go short from 17350 level for quick profit of 400 points in Dow.
2. Dow fluctuates in its correction zone of 16600-16900 and then closes above 17100. In this situation one should go long for target of 18000.
3. Dow fluctuates in its correction zone of 16600-16900 but reverses direction without closing above 17100. In this situation one should go short for target of 15400. This situation is of high probability.

Tread carefully as you trade, its a minefield out there!