For the uptrend to resume, the Dow will need to rebound above the values of the long-term Guppy Multiple Moving Average currently near 28,000. The GMMA provides good understanding of trend strength and stability. True long-term trend continuation calls for the Dow to move above previous highs near 29,500. Anything less is not a resumption of the long-term trend.
This is then followed by a substantial retreat. This creates a peak right-hand shoulder and completes the head and shoulder reversal pattern. Nervous investors use this as an exit signal and go to cash, or gold. Hopeful investors wait for the final confirmation of the close below the previous low near 24,500. By then the capital destruction is substantial.
The Shanghai index gapped down when the market resumed trading after the Chinese New Year holiday break. This dramatic downward drop is similar to the current Dow behaviour, but the resilience in the Shanghai index is remarkable. The rebound developed despite the absence of strong government initiatives.
A rebound from this support feature would move the Shanghai index into the narrow trading band between 2,980 and 3,040 and signal a resumption of the sideways trading that has characteristics the Shanghai index since April 2019.