Technicals | Aug 03 2015
By Nick Linton-Ffrost
Look for sell signals over the next week
We suspect that the markets upside is limited to the 5745/5800 range and should head lower towards 5400 over the next month.
For the last two weeks we have been assuming that July’s rally from 5400 is a B wave which is correcting part of the five wave move lower from 6000 to 5400. The implication is for another leg south once the B wave completes its move. Our two completion scenarios –
1. Wave B has not yet completed its move and has upside targets between 5745 and 5800 in its sights. (5800 = trend line break target and 5745 where wave 5=1).
Under this scenario we suggest taking profits on long positions around those levels and looking to open shorts once a lower high forms under 5825.
2. Wave B completed its rally 10 days ago after tracing out three waves up from 5400. Therefore last weeks bounce is the 2nd wave within our expected move lower. Clearly this view is contingent on the market remaining below 5725 and will require the market to trade below 5625 for more than two days.
Under this scenario we suggest cutting long positions now and opening shorts after 2-3 days trading below 5625 as long as 5725 resistance is not taken out.
Five days trading above 5750 negates our view.
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Another trading idea from
Fifth Wave | fwtc.com.au                                             Â
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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