XAO Technical Analysis

[Porper]

Not overly relevant to the XAO thread but the XAO chart patterns are a mess. To me there is no high probability wave count at this time. When clarity re-establishes itself we can take a closer look. To me the CBA chart shows plenty of clarity. I have been looking for $100.00 for over a year now but was incorrect....just. I don't believe a deep retracement is underway but a long drawn out Triangle (typical of a wave-4) will be frustrating for some. Choppy seems to be the way forward....BHP etc. could well come back to life, like the Small Ordinaries.

 

[gartley]

Just out of Curiosity(to keep discusion and entertainment going)-what is the base of Gartley patterns, what message they carry? Or they are just pure technicall qualitative patterns?
For example-Wave Principle is a barometer of social mood, that is best reflected in price fluctuations in financial markets. It carries a message of the emotional state of market participants. And Gartley?

It carries no message. In my opinion it's just another repeating pattern which integrates triangles that on some occasions terminate at specific fib harmonic ratios and show that there is some natural order within markets. If it does carry any other message it's of no interest to me.

Our goal is to profit. Although most systems and strategies out there will only give a probability of slightly better than a coin flip to beat the market.

Trading is 85% a mental endeavor, and having a written plan with rules and discipline to follow it is the only bible to follow. The rest is just finding a strategy that suits your style.

I could not care less if EW is a barometer of social mood. Sounds like you are a Precheter student. He is a great theorist but that is of no interest to me. Only how I can use EW to help me profit.

The Gartley as many other advanced harmonic patterns repeat over and over in timeframes ranging from minutes to monthly charts. For me personally, I found they are correct 6-7 times out of ten trades if the trade is managed properly.

 

[gartley]

The problem with EW Rimtas is that there can and almost always is more than one possible wave count in play at any given moment. Sometimes multiple wavecounts. Unless most of these wavecounts are pointed in the same direction you will not have a high probability scenario. If they differ, then better just to trade specific EW patterns.

At least with harmonic patterns like the USDCAD which I am looking at now, I know exactly where I stand.

These advanced patterns occur every day and I mainly trade the 1hr timerframe. We have a potential bearish pattern forming. IF the market continues to rise to a level of 1.2562 or even slightly higher and then reverses and triggers a sell then I will sell. We have a R/R of 1:2 for the first objective of 1.24616 which is the 0.382 retracement and 1.24131 which is our secondary objective usually the 0.618 or 0.786 level depending on which one aligns better with earlier support or resistance and a confluence of fib levels.

If the trade is a dud then we will be stopped out just above the origin at 1.2567. It's a low risk trade offering good R/R. It will either work or it won't and if it doesn't then we take a small loss and move on to the next trade knowing that we have a 6/10 probability of being correct.

It's that simple for EW ambiguity.

 

[rimtas]

The problem with EW Rimtas is that there can and almost always is more than one possible wave count in play at any given moment.

Agree totaly. Just disagree that it is a problem. For me personaly it is an advantage. When trading, you keep in mind the specific price levels which when breached gives you an edge to manage your position properly and get out or add up depending which count is in operation.
I often see folks who set up stop levels just by a simple percentage, even when it is clear using EW that particular stock or market is in a corection and probabilities are in favor of your dirrection. They just get stoped out at the wrong levels just to see stock will rally after.

I like trading EW, which I do very rarely, because good setups are once or twice a year. So my trading style is slow-I start forming portolio which takes couple months and then just let it run, cutting out positions which do not follow the market. My last trade was initiated last year Nov-Dec, consisting of 12 Blue chip ASX stocks, and most of them I kept till APR-May, With TTS being the last stock to sell last week. WOW was the most and only looser, with 3% realized loss , but WBC, ANZ and BOQ were stars-managed to get out with no less than +25% from each.

I think we are heading into another buying opportunity, and I will start buying banks and commodity based stocks soon for one more trade this year(probably the last). The main reason is that commodities started a 2 year cycle up, and because Australia has commodity based economy, relief ralies in those markets will push All Ords up.

I personaly do not believe into a bear market from most recent 6000 peak, as most blue chip stocks are at new highs with incomplete wave structures and the only reason All Ords is as these levels is that Small Caps are dragging it down. Most Asian indices have incomplete bull structures as well, and expect a bear wave only because DJIA has an Ending Diagonal, whis also can be fake, just do not ads up. When bear starts, you can see this in ALL major world indices, like in 2007 or 1999-they all had complete wave structures, all aligned for a crash.

But **** happens. That's Why I like EW-it tells you when you are wrong. Other methods just don't give you an edge EW does. Let's say theoretically-you opened a short position based on most recent long term Gartely. let's say you have no idea what EW is. How and when do you know that particular Gartley fails? Without EW, there is no any way of knowing this unless you keep short right to the loss. That is the main reason I avoid any other quantitative methods.

 

[rimtas]

View attachment 62874

Not sure which one is correct, as I got different one, probably adjusted due to South32 spinoff

 

[rimtas]

Ritmas are the banks looking at a 5 wave count....down?

I don't know which particular banks you are refering to, but ASX Financial Index is now making a (C) wave. Usually when (B) waves are short , they do not have enough time to bring sentiment high, which could allow for a full blown third wave crash and which could be longer than wave (A) itself if wave (B) had more time to drift sideways UP. So I think banks are approaching their bottoms and with two subdivisions left, financials should bottom out ahead of All Ords, as it always did before. And then rally begins.
Depending on where the bottoms in banks would be, the approaching rally could be either corrective that would carry +20-30% up in some banks, or it could develop into a massive advance that would lift All Ords to ATH. I am particularly interested in NAB. I took small loss on it recently, but if it manages to bottom above $30.93. I will buy it heavily again, as with a three wave decline from April $39 Top it would look more than bullish.

 

[gartley]

Let's say theoretically-you opened a short position based on most recent long term Gartely. let's say you have no idea what EW is. How and when do you know that particular Gartley fails? Without EW, there is no any way of knowing this unless you keep short right to the loss. That is the main reason I avoid any other quantitative methods.

A Gartley is not the only pattern I trade but 1 of about 10 possible patterns, but it is quite common. A Gartley is nothing more than a combination of an impulse followed by an abc correction. That's it!! ( 12345 followed by an abc countertrend structure)

You know when it won't work because price exceeds the origin of the impulse ie the start of wave 1, then the pattern is invalidated exactly the same way as EW based rules))

If we want to be any good at trading, countertrend moves is where most of our positioning should come from. Where these harmonic patterns differ from EW is that we trade off specific ratios and I try not to deviate as much as I can. For example lets take a simple abc correction following an impulse. In the early stages of a bull/bear such is in a wave 2 it can retest the origin of wave 1. Quite often this is a deep correction up to 0.786 or even 0.886. Other times if the market is strong it's only 0.382.

With Gartley it's simple. We are looking for a 0.786 ( other patterns 0.886). No guessing ore forecasting Elliott Wave BS, it either works or it doesn't. But it offers a great R/R because your risk is so small. And if it does not work more than likely another high probability pattern will follow.

EW has too many counts possible at most junctures. It could be 10 counts for example. Our job as traders is to reduce the possible scenarios in order to enter high probability trades not increase them. Can you imagine working with 3 or 4 different counts 2 pointing in one direction 2 in another. What a nightmare!!!

Because harmonic patterns repeat so often, you have a good volume of trades possible on various timeframes and instruments. If one doesn't work move onto the next, with full realization that your back testing suggests that these patterns have a 6-7 /10 probability of working out the way you expect.

Since I started on this web site I have posted 3 or 4 Gartley patterns or derivatives thereof. All have been succesfull. From the monthly one of the XAO which coincided with 89 fib months from the 2007 till the USDCAD 1Hr chart posted yesterday. All in realtime and non invalidated

 

[gartley]

Well 3 months have now passed from my first post at ASF.

That post #9449 appears to have been precient and thankfully profitable on the short side although it took quite a while to play out, but it was a high probability pattern and had confluence in time as well.

https://www.aussiestockforums.com/f...=4888&page=473&p=865416&viewfull=1#post865416

That is history and where to now???? Not sure how much further down we have to go, but the decline is mirror image foldback of the advance and obvious support is at 5100.
In time, the All Ordinaries Delta medium term timeframe suggests around mid July for this cycle to make a low.
At the moment everyone is ultra bearish and fearing the worst and so the crash we expect may have to wait for some months at least.
So for now looking for a capitulation into the mid July cycle window and then a relief rally thereafter for some months before the next leg down.

 

[shouldaindex]

Do you all use the XAO as opposed to the XJO?

Just asking, as I know sometimes only 1 of the Dow / S&P reaches a critical level, (20.0% vs 19.7% decline for example). Not sure if that's important.

 

[Logique]

Just a look at the long term XAO on closing price, that I did for my own benefit, happy to share.

 

[Logique]

Actually the German DAX, but many Euro markets are threatening to break out of the the tech flag pattern. Need to see if follow through happens in subsequent days.

 

[sinner]

Do you all use the XAO as opposed to the XJO?

Just asking, as I know sometimes only 1 of the Dow / S&P reaches a critical level, (20.0% vs 19.7% decline for example). Not sure if that's important.

XAO and XJO are very similar (pretty much interchangeable), Dow and SP500 are very different indices, only similar in the sense of being large cap. The Russell 1000 is probably the most similar to SP500.

 

[Logique]

Just a wait and see proposition atm.

Weekly, close, at 14 Nov 2015.

 

[Logique]

The XAO is trying to change momentum, with 4,950 as support area.
Santa has left the building.

 

[Gringotts Bank]

How I see it.

 

[Logique]

4960 this morning, so it's the moment of truth for that support level.

 

[Boggo]

4770 area around mid next week ?

Just my

(click to expand)

 

[PennD]

 

[RazzaDazzla]

Bullish Divergence looming on the Weekly?

 

[Porper]

View attachment 65544

Bullish Divergence looming on the Weekly?

That is the Chart from the video in last nights XJO review from The Chartist.