Technicals | Jul 27 2015
By Nick Linton-Ffrost
Trading below 5600 has our technical indicators evenly balanced
We suggest watching how the ASX200 (XJO) reacts to the 5550-5650 pivot level over the next few days as this should determine the market's direction for the next month.
Upside case (chart 1) – assumes that the market is simply pulling back to the down trend line before another leg higher.
- five wave move lower from 6000 to 5400 implies the corrective A wave is complete
- Break above 5600 pivot level implies 5850 target (channel height added to break point at 5600)
- view contingent on XJO not trading below 5550 for more than 2 days
Downside case (chart 2) – corrective bounce from 5380 is now complete and a move toward 5380 and 5100 is underway.
- five wave move lower from 6000 to 5400 implies the corrective A wave is complete
- three waves higher from 5380 to 5720 improves odds that wave B has completed its move
- trading below 5600 pivot level (top of wave i and trend line break level) adds weight to this completion view
- targets at 5380 previous low and 5100 where wave C=A. Timing on 5380 is 2-3 weeks. Timing on 5100 is 2-3 months.
- view contingent on XJO forming a lower high under 5720 and trading below 5550 for more than 3 days
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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