Time to speculate on the broader picture.
Given the price action in the past few sessions, it may be the right time to redraw the chart patterns, and get prepaid in case XJO heads down further.
The down pattern in May and June was a carefully engineered structure, guaranteeing a subsequent major move given the amount of time spent building it.
Towards the end of that pattern, we had a series of domestic bad news (inflation, data, rate hike). However, all of that resulted in sharp run, spiking XJO above the “Mr K! Line” (the trip to Saturn).
That rally appears to have been designed to burn the existing shorts, and lure in bulls with the promise of a “bull flag” and “break above the Mr K! line”. We are now probably seeing the impact of those bad news/data. As always, markets rarely price-in things instantly without pulling some shenanigans first.
The blue circle, where things started to turn, is an interesting place where the robust 7375 resistance line (H&S) meets the purple uptrend back test line. In technical terms, that’s basically the highest it could be pushed up on bad news while respecting the patterns.
XJO closed the week around a fence (See chart).Unless it can ignore the overnight action, the next station would be 6900. It may not happen on Monday, but I think it’s very probable now.
6900 is the neckline for the H&S pattern (daytime version of H&S is in blue). The night market, however, generated a sloping H&S (shown in yellow).
I personally think 6900 will ultimately give in. But the night time H&S probably holds, which gives us a downside target of6400 or a touch higher in the next couple of months.
Interesting how the “Cliff Edge Line” (Neckline for the Sloping H&S), “BYO Truck Line”, and 6400 Major Horizontal Support are merging. This should provide a very robust support area.
As for drawing the BYO Truck Line, I ignored the two orange circles (June and Sep 2022). These I think were extreme end of run moves.
All that are of course the bearish view of the chart.
(20min delay)