Technicals | Jul 11 2016
By Nick Linton-Ffrost
A confirmed break above 5300/50 should trigger the start of a rally towards 5800/6000
After trading between 5150 and 5350 for the last few weeks we suspect a break north is just around the corner. If the ASX200 (XJO) holds above 5150/5200 and trades above 5300/5350 for a few days our bullish count outlined below should come into play.
Bullish count (chart 2) – assumes the drop from 6000 to 4750 completed a major (4) which implies the market is trading within a major (5) towards 6000. Our 6000 target is derived from the break above the 10 month downtrend line (i.e. height of trend channel added to break point around 5150/5200).
In the near term we are marking the dip from 5425 to 5035 as a minor 2nd wave which implies that a minor 3rd wave move north is underway. Trading above 5300 will indicate a higher low is more than likely in place and trigger a buy signal (chart 1).
If the market trades below 5150/5200 for a few days we will revisit the bearish wave count we have been discussing for the last few weeks (chart 3). The bearish count assumes the three month rally from 4750 to 5425 has completed a major (B) wave which implies the market is now trading within a major (C) headed towards 4750/4800 (i.e. the height of Feb-Mar uptrend channel subtracted from 5050/5100). A break below 4750/4800 would open up targets around 4200 where (C) = (A).
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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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