Technicals | Dec 14 2015
By Nick Linton-Ffrost
All eyes on 4925-4950 support
Clearly the three month support line between 4925 and 4950 is technically significant for the ASX200 (XJO). Trading below that level for more than a few days will most likely trigger technical selling and indicate targets between 4550 and 4300 over the next few months.
If the XJO does break below 4925 our wave counts assumptions are as follows –
- we mark the decline from 6000 to 4950 (Aug low) as wave (A) and the two months trading between 4950 and 5400 as (B)
- the dip from 5400 to 4950 and the bounce back to 5300 are the minor first and second waves within the (C) to 4300-4550
The 4550 target is derived from subtracting the height of 3 month pattern from the break point around 4950. The 4300 target is where wave (C) approximates (A)
Two quick points –
- Even though the three month support level is significant and should provide strong support we do not suggest buying around that level and setting stops below. We recommend waiting for a bounce from that level and then wait for a higher low to form between 5100 and 5200 before opening longs.
- If you do open short positions with a break below 4925-4950 we suggest placing stops above 5100.
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.
