XAO Technical Analysis

Magdoran · 6 March 2007

Re: XAO Analysis

kennas said:
Hi Mags, just previous highs and lows. Areas of conjestion. Previous highs should be support.

I'm starting to think however, that in radical moves like this, that these support and resistance lines become less valid.

They've certainly worked for me in the past. Buy support, sell at resistance...Pretty basic stuff, but has worked in a 'stable' market. Not sure how it works in this environment. Although, perhaps this is stable: A constant flow down hill....

Hello Kenas,

Not a bad method for locating potential areas of support/resistance, but remember in fast moves (especially fear driven panic moves) that these areas may not offer the same kind of effect compared to an orderly bull market trend.

Try using a retracement tool from pivot points (say a key low to a key high), and examine how bearish moves tend to behave in the horizontal divisions. If you study enough patterns, you can work out the probabilities for price levels of support and resistance.

In this case, this is a fast corrective move which trades very differently from other patterns. Try going back to your studies on key market tops and look at the fast corrective moves with the retracement tool for a while and see if you can see a correlation between the patterns and the divisions of the range. (Also, try doing this in weekly and monthly charts too for comparison).

You might find this enlightening to revisit this in conjunction with what you’re doing. Hope this is helpful.

Kind Regards

Magdoran

Sean K · 6 March 2007

Re: XAO Analysis

CanOz said:
ON THE TICK ITS JUST BOUNCED OFF 5627.2

Cheers,

Bounced off this twice now. Too early to tell, but maybe there is some support around here. Some attempted bargain hunting coming in. Hope it is for those buying.....

chops_a_must · 6 March 2007

Re: XAO Analysis

Magdoran said:
Ok, just pulled out my maximum crash target as an example by 18 July based on the cycle into the high, hence it is totally unconfirmed: 4178.48.

Don’t panic though since this is such a raw probability way to early to confirm, but as you can see, this is not of much value now, since it may never happen. It’s possible, but I have no way at this point of assigning probabilities…

If this is your worst case scenario, what was your figure for the "best case" scenario on the upside? Given that we have probably seen the first lot of serious support today, what are the projections from here? I presume a bounce at this level reduces the probability of the worst case scenario?

Cheers.

Magdoran · 6 March 2007

Re: XAO Analysis

chops_a_must said:
If this is your worst case scenario, what was your figure for the "best case" scenario on the upside? Given that we have probably seen the first lot of serious support today, what are the projections from here? I presume a bounce at this level reduces the probability of the worst case scenario?

Cheers.

Best case for the bulls is a full continuation of course… but I think this is pretty unlikely given the pattern, but possible.

This kind of bullish drive is expected in such volatile markets, the norm being a 75% retracement of the first drive down for the lower high. This can happen now, or this could be a brief 1-4 (prefer 2) day counter trend.

But this is a strong bullish move, larger than I expected at this point.

The other common situation in patterns like this is a marginal top coming in around the 25% extension from low to the first high (in this case 23rd Feb), or 12.5% extension (50% extensions can end a move but I think this is much less likely from the pattern).

So any of these are possible.

We’ll just have to wait and see…

Mag

Teddy Bear · 6 March 2007

Re: XAO Analysis

Magdoran,
Tks for that you just answered my current burning question.
TB

Sean K · 6 March 2007

Re: XAO Analysis

Magdoran said:
Hello Kenas,

Not a bad method for locating potential areas of support/resistance, but remember in fast moves (especially fear driven panic moves) that these areas may not offer the same kind of effect compared to an orderly bull market trend.

Try using a retracement tool from pivot points (say a key low to a key high), and examine how bearish moves tend to behave in the horizontal divisions. If you study enough patterns, you can work out the probabilities for price levels of support and resistance.

In this case, this is a fast corrective move which trades very differently from other patterns. Try going back to your studies on key market tops and look at the fast corrective moves with the retracement tool for a while and see if you can see a correlation between the patterns and the divisions of the range. (Also, try doing this in weekly and monthly charts too for comparison).

You might find this enlightening to revisit this in conjunction with what you’re doing. Hope this is helpful.

Kind Regards

Magdoran

Thanks Mag, will look into it. I haven't studied the difference between fast corrective, or bullish moves, but would assume they wouldn't play out the same way, as I've alluded too. Having said that, this hasn't finished yet, and we may still see the pattern I have projected just on support and resistance.

I also try to combine fib retractments to these sorts of patterns and if they hit support lines, and possibly a 200d ma, then they have more validity. Still, basic stuff compared to your analysis....

Interesting watching this play out. Today was a great surprise. Perhaps there's just too much money laying around for this market to stop going up and away...??

I still think this will play out over about 3-6 weeks. Not 8 days....

Sean

nizar · 6 March 2007

Re: XAO Analysis

kennas said:
Today was a great surprise.

Really?
Even corrections have up days.

And if we are up again 2mrw and i think we will be and XAO should hit 5800 (your target) and then fall back again.

Tomorrow the lower high should be made. That will really get the bulls excited, and see some money from the sidelines come back in.

Sean K · 6 March 2007

Re: XAO Analysis

nizar said:
Really?
Even corrections have up days.

And if we are up again 2mrw and i think we will be and XAO should hit 5800 (your target) and then fall back again.

Tomorrow the lower high should be made. That will really get the bulls excited, and see some money from the sidelines come back in.

Yep, but I was very surprised by a 2% dead cat....I haven't seen a cat bounce so high. I am pretty sure it's dead though. Perhaps it was because the fall has been so sharp.....

Too early to call for me about hitting 5800 soonish. Might go sideways for a little bit, or punters might think it's too good a opportunity to lock in some losses and sell out tomorrow to live another day. I think there's still plenty of people out there sitting on paper losses from jumping on the bull a bit late. There's still too much static in the air for any clear direction IMO.

Of course, I am hoping for a quick and simple A B C down to 5450, so we can get on with a continuation of the running of the bulls........

theasxgorilla · 7 March 2007

Re: XAO Analysis

kennas said:
Yep, but I was very surprised by a 2% dead cat....I haven't seen a cat bounce so high. I am pretty sure it's dead though. Perhaps it was because the fall has been so sharp.....

I had a bet on with a colleague. He thought that we were due for another 1%+ drop today...I said that the market would not close more than 0.5% lower...I didn't expect to win the bet like this

Coffees are on him for the rest of the week.

Bush Trader · 7 March 2007

Re: XAO Analysis

I'm still unsure

The question we must ask ourselves, is who is leading whom? A small rise in the US resulted in a firm start in AUS, then strong afternoon as a result of solid gains in Asia. Both Europe and US had a great night after the Asian rally. Now SPI up 108. It will be interesting to see how the Asian markets proceed this afternoon. Will people use this opportunity to exit, or will the bulls rain supreme, dismissing such notions of the Yen carry trade as rumour and myth?

Cheers

Uncle Festivus · 7 March 2007

Re: XAO Analysis

Hello Bush Trader,
Friday may give some indication on how strong this rally will is. Last Friday showed that there was always going to be selling pressure to the close as nobody (daytraders mostly?) wanted to left exposed to the market over the week-end. I assume it would be similar this Friday too if todays rally fizzles a bit. Sideways day Thursday maybe. I posted a thread (stagflation under the radar) about the economic news in the US being largely ignored overnight, so maybe the US will start factoring the fundamentals again, & the consequent effect for our market.

Sean K · 7 March 2007

Re: XAO Analysis

nizar said:
Really?
Even corrections have up days.

And if we are up again 2mrw and i think we will be and XAO should hit 5800 (your target) and then fall back again.

Tomorrow the lower high should be made. That will really get the bulls excited, and see some money from the sidelines come back in.

XAO double topped 5800 and has just retreated dramatically to 5775. You might be correct Nizar, but too early to tell. Will be interesting to see how it finishes.

Bush Trader · 7 March 2007

Re: XAO Analysis

Bush Trader said:
Will people use this opportunity to exit, or will the bulls rain supreme, dismissing such notions of the Yen carry trade as rumour and myth?

Cheers

Sorry Reign not Rain, we need rain to plant the crops!

Kauri · 7 March 2007

Re: XAO Analysis

Just mucking around putting a few lines on the 5min XJO...

Sean K · 7 March 2007

Re: XAO Analysis

Kauri said:
Just mucking around putting a few lines on the 5min XJO...

Clear resistance between 5800 and 5850. 5780 ish looks to be support for now. Interesting.

Uncle Festivus · 7 March 2007

Re: XAO Analysis

Comrades,
The XJO has hit my 50% retracement level at 5825 and looks to be hitting resistance. What do we think?

Sean K · 7 March 2007

Re: XAO Analysis

Uncle Festivus said:
Comrades,
The XJO has hit my 50% retracement level at 5825 and looks to be hitting resistance. What do we think?

Could even be Wave B done. I was expecting this to takes weeks, not a couple of days.

theasxgorilla · 7 March 2007

Re: XAO Analysis

XAO looks like closing around 5791...right on the 40-day EMA.

Sean K · 7 March 2007

Re: XAO Analysis

Might have been just blind luck on this occasion, but 5650 and 5800 targets reached for wave A B. Happened a little faster than expected.

Wonder if we'll get the Wave C to 5450?

Lots of factors influencing this of course. Might keep pushing on up with great data out of the Evil Empire.

chops_a_must · 7 March 2007

Re: XAO Analysis

Uncle Festivus said:
Comrades,
The XJO has hit my 50% retracement level at 5825 and looks to be hitting resistance. What do we think?

kennas said:
Could even be Wave B done. I was expecting this to takes weeks, not a couple of days.

Perhaps sideways movment tomorrow and Friday? Followed by a breakdown either beginning on Friday, or early next week, coinciding with negative news from the US? I can't see how it can be good news in the US.

This would probably then go close to matching up Magdoran's timeframe.

In the immediate term it doesn't look good, but still looks like a good sign for the continuation of the trend after.

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