Technicals | Sep 15 2023
Bottom Line 14/9/23
Daily Trend: Down
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 4300-4200 support:
→ our Elliott Wave count remains potentially bullish bigger picture via our ongoing analyses
→ still looking to see if 4200-4300 resistance can 100% revert to support (watching this immediate dip for confirmation)
→ the hawkish interest rate cycle is being closely monitored
→ the traditional larger base triangle pattern breakout is continuing to perform to expectations for now
Well, a week on from our last review and nothing much has changed. Price still appears to be consolidating as we continue to work our way through the seasonally weak months of August and September.
As we keep saying though, what is critical here is that the old resistance zone continues to prove it is able to act as support circa 4300-4200. Any break below here will be a potential red flag for mine so the importance of this zone cannot be understated.
What is interesting from a divergence perspective and as mentioned in our video tonight, is that we now have some Type-A bearish divergence sitting in the wings on both the dailies and the weeklies. The daily will trigger if price swings above the recent high at 4542, whereas the weekly won’t trigger until price trades above the wave-(iii) high from late July circa 4608.
As the next move north via our trend positioning will be a wave-(v), it will mean any move above 4608 that triggers the negative divergences, will more than likely be short-lived. A scenario that tends to line up nicely with our wave-(v)=wave-(i) target which is up toward 4700.
The other option of course is that this immediate wave-(iv) still needs more time to complete, with further sideways to down unfolding over the next few weeks. This would definitely extinguish the potential bearish divergence on the dailies, and may even do so on the weeklies as well. Or at least weaken the potential substantially.
So if we did witness this type of gradual weakness throughout the rest of September and perhaps even into early October, then the wave-(iv) may evolve into a descending triangle pattern which is quite typical for wave-(iv)’s.
And with the divergences out of the way, it may even influence a more extended wave-(v) which often occurs in Indices and on Futures markets as well. We will continue to keep a close eye on it.
Trading Strategy
We remain long at 4102 with our stop still sitting at 4260. Consolidation phases rarely provide scope to raise stops so we just need to remain patient for now until this immediate breather finally draws to a close.
Then on the next swing north raising our stop to above 4300 will be a valid risk management strategy. Not long to go now for the seasonally weak months of August and September to be done and dusted, so hopefully no left-field surprises transpire over the coming weeks!
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