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.
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