Technicals | Mar 20 2013
Bottom Line 19/03/13
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Technical Discussion
…. they continue to read as higher price levels being more than achievable over the coming months. And historical highs at that.' Well our long awaited projection that historical highs were going to be attained here [ in the Dow Jones Industrial Average] have now been met. Via a strong spike higher on the 5th March, and then follow through from there. There has been some overall volatility entering other Global Indices of late though. And this has certainly been a reflection of indecision coming into the market place post the ongoing strength that has been witnessed over the past 5 months or so.
Looking at the DJIA chart, it is clear that such volatility is not matched to the other major Indices. Yet there is a slight illusion here as well as the fact remains that U.S Futures markets have in fact been volatile in the night session , yet to this point in time have tended to settle before the cash markets have opened 10am New York time. I'm not going to draw any conclusions from this outside noting the potential for volatility, and therefore the need to remain vigilant over the coming weeks. And to step away from getting too complacent. Price has just probed into historical highs after all.
There is a great trading pattern that we are going to keep a close eye on, that has the potential to unfold over the coming weeks. And that is a congestion pattern, in the form of a symmetrical triangle or something similar, evolving shorter term, on and above the all time high price zone. Such a pattern would have trend continuation written all over it. It aligns our Elliott Wave count as well that is presently calling for a higher degree Wave-4 to start kicking into gear shorter term, post the completion of the 5-wave subdivision we are presently watching as part of the Wave-3. If this is a Wave-3 unfolding as proposed, it has now extended nicely up to the 1.618 x W1 extension target circa 14330, with price recently breaking even higher above 14500. An indication that a Wave-4 consolidation phase could be near. So if this does unfold as expected, for the overall move to indicate it still has more upside left in it, a resting phase on or above the all time high price zone around 14200, would certainly have a lot to like about it.
Trading Strategy
Nothing to do here for now from a trading stance outside keeping an eye on a potential Wave-4 consolidation phase taking shape shorter term that unfolds within a bullish formation as outlined above. If price complies to our wishes, then this will be our next trading opportunity to run with a Wave-5 move higher. My only concern would be if price starts to fail via a convicted move below the wave-iv of a lesser degree circa 13784. A push that would be well below the typical 38.2% retracement zone, and therefore a level that would start raising some alarm bells. Remaining bullish till then.
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Risk Disclosure Statement
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