Technicals | Feb 14 2012
By Rudi Filapek-Vandyck
It is Charlie Chartchecker's observation that most traders in the market are using relatively short term data while many suppliers of market data also limit their range to 3-10 years. While this seems like a lot to rely upon, he is of the view that accurate assessments of longer term trends require longer time horizons. Charlie Chartchecker advocates using data going back at least thirty years.
In addition, he advises using at least two market indicators.
Taking a look at the monthly price charts for the All Ordinaries index, Chartchecker (using long term data) concludes it is easy to see where the longer term trend lines are, and where the index sits in relationship to these trend lines.
Right now, he sees "bearish hidden-divergence" as the index has failed to keep pace with the two market indicators at the bottom. This, he suggests, points into the direction of future weakness. Call it exhaustion of the uptrend, if you like.
Also, notes Chartchecker, "the present bars on this monthly chart are inside bars on a diminishing basis, often ultimately leading to continuation of the prior direction. As to where that may lead price to is easily assessed from the long term trend lines".
In other words: Chartchecker is anticipating a pull back, but he doesn't seem too worried about it. Longer term trendlines, supported by his two market indicators, are expected to provide him guidance about when the ideal moment presents itself to get back in with ears pinned back. As clearly shown on the chart, the last such moment (point A) was back in March 2009.
Charlie Chartchecker is the pseudonym of a 53 year old Project Director and Forensic Market Analyst with trading experience since the 1980's. All analysis, conclusions and views are his and not FNArena's.
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
