xao...more falls to come...???

Just another correction in my opinion...

As I see it, we have just completed phase 1 of a 3 phase correction cycle...

Phase 1:

Initial sell-off...relatively quick and stops at support, giving the market the false sense that the previous trend is still intact.

A period of sideways trading follows as various groups buy in or sell out depending on their particular interpretation of events.

Phase 2:

Secondary sell-off...usually much quicker and more sever than the initial sell-off, as the market realsises the initial trend has broken and sell...even if only for a short period.

Once again, a period of sideways trading follows, as once again various market groups bet on whether a bottom has been found, while others exit their positions.

Phase 3:

Final sell-off...usually less convincing, slower and less severe than the previous 2.

As on the previous occassions, a period of sideways trading follows along with a rather unconvincing rally...and again, as with the previous 2, a sell-off ensues, but on this occassion, it fails to fall below the previous low.

The correction cycle is over and a buy signal is triggered.

We saw a very good example of this typical correction pattern on the XAO just months ago...see attached image.

Cheers!

Unfortunately, HC will not allow links to share-scene...to see the chart you will need to go to:

http://www.share-scene.com/uploads/post-38-1129242599.jpg

(you will need to remove the dash (-) in the word share-scene)