Hi all,I've been reading the chicken entrails again to produce...

Hi all,

I've been reading the chicken entrails again to produce this update to my post of 16/10/10 'Price Movements'. Given today's action I thought it would be worthwhile. The chicken concerned seemed less convinced.

The navy pitchfork from my earlier post still remains in play as it continues to be a good descriptor of price movement. I have added three additional lines - the first and second warning lines (merely measured, outward extensions of the original pitchfork) and the 0.618 division between them. The clickable chart in the post should expand to fill your screen within a new browser tab so detail shouldn't be a problem, and so you can tab between this text and the chart.

Because today's price action was driven largely by the announcement this morning (19 Oct ) it is a little more difficult to anticipate what tomorrow might bring compared to a normal trading day but to keep it simple, I have distilled my thoughts into the following two scenarios.



SCENARIO 1 (see chart)

Price will climb with continued strength and, where today's high penetrated but failed to close above the 2.618 Fibonacci line (marked), tomorrow's action should see price rise to punch through the 2nd warning line (marked) and close well above it.

SCENARIO 2 (see chart)

Price will continue to rise to touch the second warning line at 23 cents then pull back to close on the 2.618 Fibonacci line at say 21.5 cents. This would create a black candle similar to the second candle within the small green ellipse and indicate a reasonable probability that price will complete a similar pattern within the large ellipse to that contained within the smaller one. This would also include a retrace to achieve at least a partial closing of the gap created today from the 12.5 close on 18 Oct to today's opening price at 16.5 cents.

ASSESSMENT

I don't know which of the two scenarios above will play out. It's just too early to tell. I will be watching price tomorrow for an early indication of whether it will push strongly above the 2nd warning line level of 23 cents and continue (i.e. Scenario 1), or reject off that 23 cent level and consolidate during the day to close at say 21.5 cents (i.e. the start condition for Scenario 2).

Note that the Stochastic is still pointing up, so that's good. The next two days should give us a clearer indication of where this current surge will take us and how long it will last before retracing to get set for the next leg up.

Just my thoughts, for what they're worth. As always, any comments or alternative/opposing views are welcomed. Now, off to get more chickens.

Regards,
Bones