Technicals | Jun 15 2015
By Nick Linton-Ffrost
Pivot point around 5580
After falling 10% from this years high the question is whether or not the move is a correction or a medium term trend change. Either way while the ASX200 (XJO) remains below 5580 the downside risk remains in place.
Under the corrective view we would expect support to kick in between 5450 (pattern break target) and 5350 (where wave 3 approximates wave 1).  If these supports hold we will assume the 10% drop is corrective and will be expecting a bounce from 5350 or above back towards 5900. The view is contingent on the market finding a foot hold above those levels over the next 5 days and then pushing back above 5580.
The reversal view assumes that the XJO is trading within the third wave of a southerly move towards 5100 over the next month. The target is derived where wave 3 = 1.618 times the length of wave 1. This is also near the bottom of the major (4) wave. We would expect strong support around 5100 and a bounce back to 5400/5500.
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Another trading idea from
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