Technicals | May 30 2016
By Nick Linton-Ffrost
The last two weeks' trading in the ASX200 (XJO) between 5300 and 5400 have improved the odds for a break above the 4700 to 5400 range given that the rally from 4900 to current levels has exceeded the timing of wave ‘1’. A successful upside break would indicate targets between 5800 and 6050.
The target at 5800 is derived from the break above the one year downtrend line at 5200 and the 6050 level is the height of the eight month range added to the break point around 5400/50. Our view is contingent on the XJO holding above 5225/5250.
Trading break outs of long dated structures can be tough as they are obvious trades. The market has a habit of breaking above the line and then pulling back into the pattern before heading higher. In this case we suspect the market will rally to 5450/5475 before pulling back towards 5300 and then head towards our upside targets. If you are already long or planning to hit the buy button this week then we suggest setting stops below 5225.
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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