Technicals | Oct 26 2015
By Nick Linton-Ffrost
Levels to watch are 5420 and 5250
Breaking above 5400/5450 for a week implies a 6000 target over the next few months. If the ASX200 (XJO) remains below 5450 and trades under 5250 for a few days we expect a move south towards 4600-4800.
Bottoming view
- the decline from 6000 to 4800 is a major 4th wave within the 3 years' rally
- correction is complete given the 4th breaks down into three minor waves (abc)
- trading above the bottom of wave “a” creates wave overlap and adds weight to the bottoming view
- the 6000 target is derived from the height of trend channel added to the expected break point at 5450
Bearish view
- the XJO is currently trading within the 4th wave in the decent from 6000, which implies a 5th wave lower is just around the corner
- if the market rolls away from 5400/50 and trades back under 5250 that would indicate that 5th is underway
- the 5400/50 level is significant given that is where wave “c” equals “a” and it is the bottom of the previous wave “a” (yellow)
- trading below 5150/5250 creates a bearish zig-zag and implies a move to 4600 (height of pattern less 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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