Technicals | Dec 21 2015
By Nick Linton-Ffrost
Ground Hog Day: Pivot levels remain around 4900 and 5150.
The question remains, is the last four month trading range a bottoming or continuation pattern? We suspect that a few days trading above 5150 may signal a bottoming pattern has formed. The implication would be for a rally towards 5900 over the proceeding 1-2 months.
Whereas a few days trading below 4900-4925 would turn in favour of a move to 4500 over 1-2 months and potentially 4300 over 5-7 months.
Downside case – a break below 4900 brings the following wave count assumptions into play –
- we mark the decline from 6000 to 4950 as wave (A) and the 2 mth trading between 4950 and 5400 as (B)
- the dip from 5400 to 4950 is the minor first wave and the bounce back to 5300 is the second waves within a (C) wave to 4300-4550
The 4500 target = 4900 break point less height of 4 month pattern and 4300 is where (C) = (A)
Upside case – break above 5150 triggers turns odds in favour of bottoming pattern given –
- trading above the 5150 midpoint of the 4 mth pattern is a sign of strength and reinforces the 4900 support level
- and indicates that the decline from 5400 to 4900 was another corrective wave (abc) within the bottoming pattern
- trading above 5300 breaks above the 2 mth and the 7mth down trend lines and should trigger a move towards 5900
- 5900 = height of pattern added to 5400 break point and also equals height of trend channel added to 5200 break point
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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