Greetings XJOers, bit of a recap on the weekend report and a trading thread starter for today
As noted in the report in regards to the hourly chart, price coming into the weekend was softening, but in a manner suggesting that it was forming a little self contained three wave structure, the softening bit being wave two, and the possibility that a wave three might ensue.
Indeed said wave three has occurred/is in the process of forming.
The XJO/IG target for completion of this three wave (length of first wave added to nadir of second wave) gives an intraday target of around 4360 which is roughly 60 points above sycom (overnight futures) close.
OF great interest is that this level corresponds with the same level as historical resistance pointed out in the report, which occurred in October last year.
One thing about three wave structures, should current price action be forming one, is that they can be Corrective… that is, if only three waves are formed, often enough the entire length of the pattern is retraced, sometimes more.
So without beating too much around the bush, around the 4360 area XJO or 4330 SPI becomes an interesting area for the possibility of shorts, which if the 3 wave is indeed a three wave and not a 3+… gives a possibility of capturing a coupl of hundred points to the downside.
We still have valid divergence on the hourly and some more is creeping in with this rise… the stochastic are also well into the overbought area and has been partying here for a bit as well, bouncing up and down like a dedicated techno freak at a quality rave.
A bit of fundamental conjecture is that there is a possibility that the RBA may raise rates.. certainly the AUDUSD pair seems to think so.
Should this occur, it would not surprise me if the first market reaction is a bit of a charge to the upside… wahoo higher rates, the economy must be okay Yaaay! Then the reality of more expensive exports leading to trade imbalance, stress on mortgage holders and all that not so wahoo stuff may kick in, sending a bit of a selloff into the markets.
A lot of stuff to balance, and truth be known that’s why I tend to avoid the fundamental stuff for trading cos my little brain is not really able to handle the crazy amount of info that f/a requires… I am but a simple lines n squiggles man.
Orright… that’s it.
Luck to the short term traders luck to the long term traders.
As usueal, if we gap down on open I will be looking for longs, if we gap up I will be looking for shorts, if we open at sycom close levels I will have No Freakin Idea.
And as said to a mate yesterday, I can’t Bear all this Bull about sentiment… LOL
(20min delay)