XAO Technical Analysis

Edwood · 11 November 2011

Boggo said:
Amazing how areas of support/resistance seem to have an influence and coincide with other factors that influence the overall behaviour.

We need to get this gap closed and then get the ~4500 line to become support.

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looking like a bearish gartley Boggo - until it isn't

Boggo · 11 November 2011

Edwood said:
looking like a bearish gartley Boggo - until it isn't

The A-B didn't quite make 0.786 of X-A as it should.
Overall though it indicates a major hurdle approaching 5000 if Bryce Gilmore's theory holds up.
I have looked at the basics of that theory but I prefer to keep it simple and just look at where we currently are in the overall pattern and where the support and resistance areas are.
At the moment (as per my earlier chart) we are trying to get through some basic resistance.

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nulla nulla · 20 November 2011

The xao appears to have bounced off the September lows of 3900 and begun moving sideways with higher highs and lower lows. Still very tenuous and subject to wild swings as the market oscilates between panic over the European mess and irrational exuberance of "she'll be right mate". It will be interesting to see if the xao holds above the recent support levels of 4209 and 4193 or whether we drift lower to retest the low of 3905.

For now I see the market tracking sideways in a tight band between 4200 - 4400. Hard to work out if the xao is consolidating for a move upwards or pausing before the next round of sell offs. I can't see any likelihood of short term news turning the market bullish enough to push above 4400. I can see the possibility of retracing on negative news out of China tipping the scales the wrong way.

Boggo · 20 November 2011

My simple view of it at the moment, a 300 point range between 4200 and 4500 is probably where we are going to spend a bit more time.

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Whiskers · 21 November 2011

nulla nulla said:
The xao appears to have bounced off the September lows of 3900 and begun moving sideways with higher highs and lower lows. Still very tenuous and subject to wild swings as the market oscilates between panic over the European mess and irrational exuberance of "she'll be right mate". It will be interesting to see if the xao holds above the recent support levels of 4209 and 4193 or whether we drift lower to retest the low of 3905.

I favor a bit of a retest of 3905 atm... looks a bit H&S'ish.

RazzaDazzla · 22 November 2011

My humble opinion, market is oversold. Running/expanded flat from XJO ~4400 high of wave I that was set at end of October.

Hope to see ~4,100 hold and attract buyer support with some volume and a good bar to signal end of ABC correction. ~4,100 is also a ~50% retracement.

If ~4,100 fails dramatically, then hang onto your hats as the previous strength has been the ABC correction in the continued downtrend.

Boggo · 22 November 2011

Just hung in there today...

(click to expand)

RazzaDazzla · 22 November 2011

Boggo said:
Just hung in there today...

(click to expand)

Looks like a nice completed ABC correction from the recent high. Though Europe and USA debt is one hell of a headwind to be sailing into.

VSntchr · 25 November 2011

RazzaDazzla said:
My humble opinion, market is oversold. Running/expanded flat from XJO ~4400 high of wave I that was set at end of October.

Hope to see ~4,100 hold and attract buyer support with some volume and a good bar to signal end of ABC correction. ~4,100 is also a ~50% retracement.

If ~4,100 fails dramatically, then hang onto your hats as the previous strength has been the ABC correction in the continued downtrend.

Any updates now that 4100 is gone?

Whiskers · 25 November 2011

Probably got a little to go yet to finish out the H&S pattern... maybe 4000ish.

That would also set up a good rising trend line.

Boggo · 25 November 2011

VSntchr said:
Any updates now that 4100 is gone?

All that is left until August support at ~3830

(click to expand)

nulla nulla · 26 November 2011

Yesterdays close of the xao at 4057 was only one point above the 4056 close of 8-8-11 and open of 9-8-11. At that time the xao rallied but 6-7 weeks later tested new lows of 3950. The xao seems to be rushing headlong downwards with every likelihood of breaking through the previous support levels to test new lows.

The doom and gloom of the global sovereign debt issues continues to dominate the news and all eyes are nervously watching China. Contraction in China will impact strongly on Australia's resource sector. Combine this with the impact of the credit squeeze on our finance and property sector and the future picture is not looking to rosy.

Billyb · 27 November 2011

nulla nulla said:
The doom and gloom of the global sovereign debt issues continues to dominate the news and all eyes are nervously watching China. Contraction in China will impact strongly on Australia's resource sector. Combine this with the impact of the credit squeeze on our finance and property sector and the future picture is not looking to rosy.

Yes there's no reason to believe that the ASX trend will change while Europe is still in this mess. If Europe's lending sector is in a mess then so is our lending sector. All this technical analysis is fun but at the end of the day if the fundamentals are this crap it's hard to see the light at the end of the tunnel yet.

davo8 · 28 November 2011

nulla nulla said:
The xao seems to be rushing headlong downwards with every likelihood of breaking through the previous support levels to test new lows.

Indeed. On medium and longer timeframes, 4000 looks like a level to be toyed with for a while before heading lower. There are levels around 3700-3800 but the big one is 3200 and that's my pick.

Contraction in China will impact strongly on Australia's resource sector. Combine this with the impact of the credit squeeze on our finance and property sector and the future picture is not looking to rosy.

Yup. The slide in the AUD, CRB, metals prices all indicate commodities trouble, and failed bond auctions in Europe mean trouble for our banks. All we need now is for consumers here to stop spending and house prices to slide and it's hard to see where any conceivable recovery could come from.

Logique · 4 December 2011

The news commentary is relentless isn't it. I know the thread header says XAO, but Europe does affect this. And I'm not attempting to predict the future here. Please excuse the mixed metaphor, it's actually big bad wolves who huff and puff.

Whiskers · 20 December 2011

The next few days are obviously critical for the direction into the new year.

While the weekly chart is looking like Three Black Crows atm, what's the thinking toward the break north (daily chart below), which could see resistance around 4,400 broken and a potential H&S, would set the yardstick to test the next resistance around 4,700?

davo8 · 21 December 2011

The trend you've drawn starts in Oct. If you go back to Aug or Apr the trend is (a) down (b) range bound 4000-4400. You could certainly trade the cycle off the current low back to 4400, but if you place bets on it going higher, you are betting that the market sees a return to the good times in a year or two.

My view is that the fundamentals are so unrelentingly bad, that when the fake Euro treaty falls apart in a couple of months we'll be back here again, or lower. Or it could be riots in Spain, or it could be the EFSF losing its credit rating, or a French bank failing, or Portugal defaulting on its bonds, or the start of a US-China trade war. You name it!

It will take many months (or years) of building a base at some low level before there is the platform for a solid move higher. If China hits the wall, look out below!

Whiskers · 21 December 2011

davo8 said:
The trend you've drawn starts in Oct.

Actually, that (heavy yellow) line is just meant to show the possible H&S.

Otherwise I don't dissagree with your commentry.

A few things (not necessiarly in order of priority) that could be key indicators of a short to medium term reversal to test resistance are;

the North Korean uncertainty and presumed higher risk for conflict there [Increased demand for resources]
Better employment data in the US recently
While Greece still has problems, another of the PIIGS, Italy, has had a sucessful bond issue, and
latest better than expected business sentiment for the German economy confound the critics.

davo8 · 22 December 2011

Fair enough. I don't really know whether a H&S (or H&S bottom) is a chart pattern that you expect to see on an index like the XAO, or whether it would have any predictive power. I know H&S is used to predict the size of a move, although I wouldn't claim any success.

I see charts like this as largely reflecting the opinions of lots of other market participants who look at the same charts and see the same patterns and what it says to me is: no-one has a clue what the next big move will be!

I seriously distrust the US employment figures and much of the other fluffy news: the underlying figures are still bad. Guess we just wait and watch...

Wysiwyg · 6 January 2012

I thought 2700 was extremely pessimistic at the time and the worst of the debt crisis so far hasn't pressured below 4000 for long. The only event this year that could push the markets to extreme lows such as 2700 is a conflict in the Middle East. However, the chart suggested a drawn out bearish period and that has happened.

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