Technicals | Jul 07 2023
Bottom Line 06/07/23
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 4300-4200 (?) / 3808 / 3600 – 3400
Resistance Levels: 4638 / 4819 (all-time highs)
Technical Discussion
Reasons for optimism above 4200-4300 resistance:
→ our Elliott Wave count remains potentially bullish bigger picture via our ongoing analyses
→ watching to see if 4200-4300 resistance can revert to support
→ the hawkish interest cycle is being closely monitored
→ our traditional base triangle pattern has finally broken out to the upside and this is a big positive
As we mentioned in our weekly review last week, if we have our positioning of the overall trend correct, post some retesting of the old resistance zone as part of a wave-iv, the next move should be north again with price looking to complete the wave-v of (iii) at the 1.618x w(i) extension target circa 4633. Right at this juncture though I’m not convinced the minor degree wave-iv has actually completed. Wave-iv’s are generally complex patterns, be it quite shallow as well, so this wave-iv completing more as an a-b-c flatter type pattern would not surprise one bit. Or as an a-b-c micro ascending triangle as a minimum. Both would also see the recent gap being filled circa 4398, and this wouldn’t be a bad thing as the fewer gaps being left behind on the way up the better.
We also still have some slight bearish divergence hanging around on the dailies although it has weakened since our last review. Yet when combined with an overbought weekly divergence indicator, some minor weakness over the next week or two would be viewed as healthy in keeping this impulsive move north in play. Yet we will just have to wait and see. The overall pattern structures and the way price action has evolved, including the larger base triangle breakout, have all been sound to this point in time from a technical perspective. So there is nothing not to like here for the moment.
The key price zone that we continue to keep a close eye on though is 4300-4200. Previously we were watching it as an area of resistance, yet now we are watching it to see if it can revert to a strong support zone. Put it this way, any break back below this zone via a move that sticks will be concerning. On the flip side, continued consolidation in and around this zone without it breaking down will be a bullish omen. There is so much fundamental negativity around at the moment, especially in Western Nations around the world, I’m actually quite surprised markets overall are continuing to hang in there. Price action is our leading indicator though, not the so-called financial experts in the media, so this is what we will continue to stay focussed on.
Trading Strategy
We remain long at 4102 with our stop raised into higher profits in between reviews to 4260. We haven’t been overly aggressive with the stop with our aim being to catch as much profit as we can within this upcycle. And if the immediate wave-iv continues to remain shallow then we should be able to achieve that. Our risk has been managed so nothing further to do for now.
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