Technicals | Jun 06 2016
By Nick Linton-Ffrost
Pivot Levels
The bottom line for us is whether the rally in the ASX200 (XJO) from 4900 to 5425 has completed a ‘C’ wave or is part of a 3rd wave. We suspect the next few days trading will give us the answer. If the market is trading within a 3rd wave (top chart) the implication is for a rally to 5725 where ‘3’ approximates 1.618 times the length of wave’1′. From there we would expect a pull back to complete wave 4 before a move towards 5880-6000.
Our 5880 target is derived from the break above the one year downtrend line at 5200 and 6000 is 75% of the height of the nine month range added to the break point around 5425/50.
We think that trading above 5350 for more than 2 days should be enough to start the move higher. This view is contingent on the XJO holding above 5275/90 and pushing above 5350 within the next few days.
If the market has completed a ‘C’ wave (bottom chart) the implication is for 1-2 months trading between 4800 and 5300. We suspect if the market holds below 5350 and spends 2 days below 5275 that odds will turn in favour for a move south to 5100 (midpoint of the 9 mth pattern) followed by a bounce to 5250 before heading lower.
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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