Technicals | Sep 28 2015
By Nick Linton-Ffrost
Major low expected over the next 2-3 weeks between 4600 and 4800
We suspect that the market has or is near to completing a major low after it’s 20% five month decline from 6000. Our best guess is for one more leg lower towards 4600-4800 and the formation of a major low around early to mid October. This is when we suggest investors step in and do some bargain hunting.
Our 5th wave view has the market falling into strong support provide by two longer term technical levels. The trend line up from the GFC low at 3000 and the 2001-2002 highs (top of major wave 1) kick in around 4600-4800.
Out two count assumptions are outlined below and both imply a bounce is on the cards. We favour the five count lower given the lower highs and flat lows exhibited by the market over the last month.
Five count lower from 6000 = drop to 4600-4800 followed by a rally to 5250
- the move lower from 5700 to 4800 is the third wave within a decline from 6000
- the last 30 days trading has formed a 4th wave (triangle pattern) where a break below 5000 implies 4800 and potentially 4600
- 4800 is the previous low at 4800 and 4600 is the triangle target
- the 5250/5300 bounce target is the top of a minor 4th wave (not shown on chart. Refer to last weeks note)
View contingent on the XJO remaining below 5250 and dropping below 5000Â within the next 3-7Â days.
Correction from 6000 completed it’s move at 4800 = rally to 5500
- the “C” wave within the decline from 6000 has completed it’s move at 4800 where “C” approximates “A”
- bounce from 4800 to 5300 is the 1st wave and the pullback to 5000 is the 2nd within the bounce to 5500
This view requires a break above 5200 within the next 3-7 days.
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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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