Technicals | Nov 02 2015
By Nick Linton-Ffrost
Downside risk remains unless the market can push above 5400
Last week’s price action confirmed that the 5400 level is a major pivot point for the ASX200 (XJO). A move above that level should lead to a trend change and imply a move to 6000.
However if the XJO remains below 5400 and spends a week or so trading between 5200 and 5100 we think the implication would be for a fifth wave lower to 4600.
Bearish view
- XJO is trading in a series of five waves lower from 6000 to 4600
- the 4th wave (zig-zag) is now complete after achieving the target 5400 where wave “c” = “a”
- trading for 5-10 days between 5100 and 5200 adds weight to this view
- a break below the zig-zag pattern line at 5100 implies a 4600 target (height of pattern less break point)
- 4700 would also provide support where wave 5 = 1
Bottoming view
- the decline from 6000 to 4800 is the major 4th wave which has corrected the 3 year up trend
- a bottom has formed given the higher low at 4900 and a higher high at 5400
- the market is now trading within the 3rd wave of a series of five waves higher to 6000
- trading above 5400 triggers a buy and implies a move to 6000 (height of channel added to 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.
AFSL 319830 | Disclaimer
Reprinted with permission of the publisher. Content included in this article is not by association the view of FNArena (see our disclaimer).
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.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
