Technicals | Jun 20 2011
LAYMANS:
Bearish patterns have now triggered and price is looking set to head a lot lower. Pattern targets align 89.00 initially and possibly down to 80.00 or slightly below if bearish momentum starts to build. Last nights trading session with price closing at 95.26 and near its sessions lows has confirmed the breakdown that triggered just 3 trading sessions ago. The top around 115.00 may now stick around for quite a period of time as the next stages of this trend start to unfold. Although bigger picture, higher levels well above the 115.79 highs we believe will be achieved, price has now headed back into the longer term trading range and this is exactly where it may stay until, the larger pattern finally resolves itself. This could even potentially take a year or two to unfold. Basically we don't expect the Bulls to resurface now shorter term or even medium term for that matter. It is what it is.
TECHNICAL:
Remember the trading range price was bound by from June 2009 to February 2011. Well price has now well and truly re entered this area and circa the immediate contract it means that the 80.00 – 103.00 range could be what we see here now for quite a period of time. Or perhaps an even larger range for this next stage centred on 80.00 – 115.00. If you thought the previous lack of upside commitment was frustrating, this next stage may test our patience even further. We can look at the immediate pattern in one of two ways. A bearish symmetrical triangle that has now broken out to the downside and targets 89.00 or just above a line of support aligned to 88.00. Or a bearish pennant pattern which targets even lower levels circa major support at 80.00 or perhaps even slightly lower. Or immediate wave equality centred somewhere in between. With our higher degree Wave-[A] locked into place back in April, it stands to reason that the larger degree Wave-[B] that we are prepared to say is now in the early stages of evolving, may well be a very long and drawn process.
Potentially even a year or two in the making . Put it this way, although we may well see the 115.79 highs challenged again as part of this process, our view is that it is going to take more than one attempt to break out past this area. For mine , the term trading range sends shudders down my spine. They don't portend to easy interpretation of the wave counts like trends do, and are also more than frustrating from a trading perspective. Our only saving grace really is that the proposed trading range being proposed is very broad. So there will be opportunities in both directions within this range, be it profit targets will likely be the order of the day. So shorter term, we continue to look for lower levels circa 89.00 on the triangle target and more towards 80.00 major support basis the larger pennant pattern. The move we see is (a)-(b)-(c) to the downside . And as wave-(c)'s are frequently impulsive, the immediate run down into the target range could be quite swift and with targets quickly achieved. This would then be seen as a lower degree Wave-A with a lot further price churning expected over the coming months. Be it we do expect 80.00 major support to ongoingly hold throughout the process.
Trading Strategy
16/6:
We've missed the trading opportunity here on these pages on the break of the pennant /symmetrical triangle pattern be it our daily global power setups area has nailed the entry perfectly. As mentioned from a triangle pattern perspective, we are looking for 89.00. From an Elliott Wave, wave equality perspective 85.00 is certainly achievable. And from a bearish pennant target point of view, major support around 80.00 should not be seen as out of the question. One target at a time. Lets see what transpires and observe where buyer support may once again reenter the fray.
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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.
