Technicals | Sep 21 2010
By Charlie Chartchecker
The prowess of the Australian business sector will be tested over the next few weeks. The decision as to which direction the AUD will take in conjunction with the pattern playing out on weekly charts (below) will impact many bottom lines and following the economic downturn, could be a milestone for many.
Significant, because the next stage will be longer term and more volatile. It’s a time to secure contracts and prices on the right side of the fence – a real test for directors, accountants, technicians, fundamentals, bankers, and economists. This is where your bank’s expertise should kick-in, and if wrong, make sure you are covered.
Some will look to economic theory, some triple-top theory, some financial data, some to China, and some to what happened last year – but the importance is found from the definition ‘Broadening Formations, Right-Angled and Descending’.
Notably the chart indicates volume is declining. The indicator’s veracity will be tested based on the rule “where all lines converge to a pivot; that point marks a major reversal point” (see A and B circled).
Being a weekly chart, the next few weeks shall likely see more price volatility as market confusion sets in. A snap shot of similar formations indicating potential outcomes are below, and for those wishing to learn more about such patterns, read on the web at
http://www.arabictrader.com/arabictrader_storage_server/application/2009/06/08/pdf/v202/98178C83-FEC7-A5D8-8B7C-A14D4196491B.pdf
Charlie Chartchecker is the pseudonym of a 52 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 (see our disclaimer).
