Chart XAO - nowhere to hide on Black Friday?, page-2

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Greynomad73

306 Posts.

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12/06/20

12:22

Post #: 45185351
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Originally posted by Greynomad73: ↑

With the US market seriously unwinding overnight it would seem the ASX is likely to be pummelled today. Futures are likely to open 3%+ down here which after yeterday's fall will certainly test trader's reserves.
In March a fall was both predicted and expected but few predicted the speed and severity. This could be a rerun based on the US' abysmal management of virus containment.
In March I was expecting a 10% - 15% retracement and by the time that proved to be optimistic I had left my selling a bit late. My chart of the XAO suggests a fall of 4.8% to the lower boundary of the shaded channel could be expected. This would also be the 50% level of the fall from the March high.
However Elliott Wave is more pessimistic suggesting the recent rally should lose between 50% and 75% of its gains. After the GFC rebound ran out of steam the XAO fell 16%. A fall of current prices to support at 5480 would be a 13% fall.
My gut feeling is 5480 is where the current fall will go if it breaks down out of the shaded channel.
I've got about half my trades pegged to consider selling today but will probably wait until market close to make a decision on that.
Good luck and keep your head down today (PS: I have a range of designer asbestos underwear for anyone in need)

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High Noon and the fall here is not as bad as the US. The low of the XAO was 5,862 and that is spot on the 50% retracement of the big drop into March. That augurs well for price to hold that level for now, however, the acid test will be what happens in the US tonight. While the XAO hasn't fallen below last weeks low yet, I wouldn't be suprised to see prices fall next week as well to around 5,800.
A senior analyst from an international broking firm told me 2 weeks ago that they believe the recent rally has been largely driven by sophisticated investors who exited the market when the fall into the end of March happened, and who are now reinvesting. While the mums and dads will have run screaming for the doors this morning, sophisticated investors have a longer time frame in mind and will usually ride out minor corrections - so it is possible that this might just be a short break in a continued push higher.
So no clear view on whether to hold or fold - but leaning towards the former at the moment. Will review the position of my trades at 3.45 today. Market has been recovering a bit this morning so hopefully that will continue into the afternoon. Of course it is Friday and I'd expect a lot of traders to close out their positions so as to not be exposed to bad things that might arise over the weekend.

XAO Value at posting: 5,974.2
1 Upvote

0 Great analysis

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