CONTINUED WEDGE PLAY
Following from my previous chart, the wedge play ought not to be discounted yet insofar as possible breakout points are concerned. Looking for breakout on volume at points which intersect with where price action exits the resistance lines (marked out in
green for the red, orange and blue wedges). As always, break out on high volume confirms the bullish reversal pattern. Target prices to be provided on confirmation.
In this case, price action has departed the wedge resistance lines at 40 and 48.5 (each of which more or less intersect with Fib levels). I have slightly adjusted the Fib from my last chart - it now starts from the low of the previous corrective wave (12.5) in the pre-Feb bullish trend.
Further commentary in quoted post.
IMPULSE PRICE ACTION
The simplest way of understanding impulse waves is that vigorous price action in a given direction can be characterised by a series of 'impulse' and 'corrective' wave patterns. Each impulse wave is divided into 5 sub-waves. It is more applicable in currency trading, but worth a mention here I think.
After wave 5, a net correction or trend reversal is anticipated. Confirmation, as always, on volume and at the relevant point(s). In this case, a break outs above 43, 45.5 and/or 51 invalidate continuation of the correction from 85 to 35 as price action is failing to make new lows (and is therefore making higher highs and higher lows).
The final candle of trading on the 2-hour chart (above) ended with a bounce off a major support line formed by two previous significant lows (15.5 and 35). If price action crosses this, no big deal as it may attempt a double bottom reversal at 35.
BULLISH HAMMER/DOJIThere has been a bit of chat about how the price action closed on the day chart on Friday. If you are looking at Chi-X, it closed at 38.5 (Doji candle) or 39 on ASX (bullish hammer).
On Chi-X, the Doji has a longer wick under the cross, which signifies a possible reversal (as does the bullish hammer):
Significantly, a bullish hammer shows that the SP dropped significantly from the opening price, but rallied to close at a higher level (thereby denotating a significant point of support and supply exhaustion at a given time).
Considering the above, there is a solid argument for bullish reversal in play. Confirmation of that reversal is as discussed above. If we see a decline towards 35 next week, I am then looking for a double bottom reversal (bullish) at 35 as market interest builds leading into the quarterly report and other anticipated news between now and the end of the month.All IMO.
(20min delay)