Technicals | Apr 13 2015
By Nick Linton-Ffrost
Improved odds of upside move to 6200 before pullback
After trading for three days above 5950 the odds have improved for the bullish triangle pattern scenario we outlined last week, where if the ASX200 (XJO) breaks above 6000 the implication is for a move to 6200/6250.
If the break dose occur we expect the rally should take around 10-15 days. Our upside targets are derived from two rules of thumb. Firstly the height of the pattern added to the break point at 6000 which projects a move to 6195. While the second target at 6250 is derived from where the length of wave five approximates the length of wave one.
We suspect that the triangle pattern is a fourth wave which implies that a break out rally would be the 5th and final wave within the move up from 5100. Therefore once the rally to 6200/6250 is complete we should see a pull back to 5800/6000.
The alternative view assumes that the 6000 level will create a triple top. In order for this scenario to come into play the XJO needs to remain below 6000 and break back below 5925. The implication would be for a move to 5750.
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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