Technicals | Jun 09 2015
By Nick Linton-Ffrost
Correction or trend change?
After falling 500 points over the last month the bottom line is whether or not the market is simply correcting the rally from 5100 to 6000 or is in the process of a medium term reversal. In Elliott terms will the drop from 6000 trace out three or five waves.
Under the corrective or three wave view we would expect support to kick in between 5500 and 5350 over the next 3-7 days. The 5500 target is derived from the pattern break at 5700 while the 5350 target is derived from where wave ‘c’ approximates the length of wave ‘a’. If these levels hold we will be expecting a bounce to 5800.
If however the XJO’s is trading within a trend reversal and traces out five waves the implied target range is between 5050 and 5100 and would take around 15-20 days. The 5050 target is derived by subtracting the 1.618 extension of wave ‘1′ from the top of wave ‘2′. The 5100 target is derived from our bottom of the (4) wave rule. If the XJO was to achieve those levels we expect a bounce from there back to 5500.
Another trading idea from
Fifth Wave | fwtc.com.au
FW generates over 150 Trading Alerts on the ASX100 each year. We are a subscription service specialising in short term technical strategies based on 27 years experience.
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