article 3 months old

Significant Pullback Ahead For ASX200?

Technicals | Mar 30 2015

By Nick Linton-Ffrost

Our two preferred wave counts

Alternative 1 (top chart) – assumes that the ASX200 (XJO) has now completed the 5th wave within the rally from 5100 to 6000 after achieving upside targets derived from the break out of a five month triangle pattern. The implication is for a pull back to at least 5750. Even though the uptrend remains intact we suspect that a break below the trend line around 5850 will imply a move to 5500 i.e. the channel height subtracted from the break level.

A break below 5750 would improve the odds that a double top has formed at 6000 and indicate a move to 5500 as well. This view is contingent upon the XJO remaining below 6000 (double top level) or not trading above 5950 for more than 2-3 days.

Alternative 2 (bottom chart) – assumes that the XJO is trading within the 4th wave of the rally from 5100 and is building a base for a 5th wave rally to around 6200 before a pull back to 5750. This scenario requires the XJO to remain above 5750 and then break above 6000 within the next 5-10 days.

In the medium term  both scenarios assume that the XJO is trading with the 5th wave of a larger 5th wave up from 4000. Therefore the implication is for an eventual test of the 5100 level ( i.e. bottom of the 4th wave) over the next few months.
 

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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