In this post I pull apart the weekly and the trend so far n waffle on about my esoteric stuff, a bit of elliot wave things and generally talk a load of used food...
Enjoy :)
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Righto...
Started 4am in the morning Australian time, after a "stinker" of a hot night.... in the southern part of this Southern Land...
Weekly
Pulling this chart apart purely from my esoteric, momentum based MACD stuff...
So far, during the run up from the march lows, the weekly chart has been the best for maintaining a position in the trend.
The turn that occurred in march was well pre-empted by the serial divergence, first in the histograms and then in the moving averages of the MACD.
The entry as marked is massively conservative when observed in retrospect, but is part of a "developed" system that requires price to hold above the 21 period moving average after crossing before an entry in the direction of the turn is taken.. and also requires quite a wide stop initially, I e. i this case, below the last low.. so this would have meant a potential risk of around 500 points, no small bikkies in any traders language.
Now that the trend is underway and then some, the idea here is to run a trailing stop beneath each isolation (low) as they form in the developing trend.
The lows have corresponded beutifully with the 21 period moving average as the trend has progressed.
my expectation here is that we will get three distinct "hits" on the 21 period moving average, and the third hit has a high probability of breaking through the 21 period ma and potentially creating a turn in the opposite direction.
Before that occurs though, I also expect divergence to show up in much the same manner as it did in the down turn... That is first divergence in the MACD histograms, (signal 1) then divergence in the MACD Moving averages (signal 2). Then the third attempt on the 21 period moving average with the higher potential of a turn down.
Sooooo bearing all that in mind, we have two distinct hits on the 21 period moving average so far in this up trend.
We have the first signal, that is Histogram divergence as marked on the green positive histograms
We also POTENTIALLY (and at long bloody last!!!) are showing divergence on the MACD moving averages now. Latest weekly high in price has a lower peak on the MACD Moving averages... ish... I say ish here as the reality is, that peak isn't actually there yet.
I have the latest MACD moving average action highlighted by an arrow on the chart... appearance of a rollover, but at such a critical time, tis only appearance at this stage. this could als be about to exhibit a crossover of the signal line (fast blue over slow red) back up, indicating further price rise.
I am also VERY highly aware that in terms of absolute distance from the MACD zero line, the current MACD moving averages are closer than when the turn up commenced in March.
This is significant as I have found that turns in price are generally highlighted by turns on the MACD moving averages when the MACD moving averages are in absolute terms around the same distance from the MACD zero line as the previous turn.
Okay... now this gets complex and complexity tensds to indicate (in my opinion) problems with a system....
What i cannot determine here, based on the limited amount of data, is whether the turn at the march lows, as highlighted by divergence on the moving averages, occurred at an extreme equivalent to where the turn in November 2007 occurred....
That is, as my chart data does not go back far enough. I cannot determine if the MACD moving average levels prior to the November highs were at the 400+ level... If so, it means that we can look at this current divergence with fresh eyes and discount the distance of the Moving averages at the march lows as they can be considered to be balancing the levels at the November 2007 highs...
If not, then I still have to bear in mind that we really should be getting these Mavs a bit higher than the currently are for a true turn to be signalled on this timespan.
Coupled with all that is an EXPECTATION that the target for this up trend is as marked... This target could be well wrong... never really looked at this methodology on this kind of time span, but even conservatively, a target level of another 130 odd points to the upside is valid. (levels between 5180 and 5420)
I cant discount this as yet and still must insist that despite a preponderance of downside potential signals occurring, I am not yet convinced that these fellahs, as shown on this chart signal Protracted downturn... yet.
But I sure as heck beleive our lower timespans are going to be telling an interesting story on this same methodology.
More of that later...
Okay... as mentioned in the last post... Fibonacci levels and wave counts are kinda at critical levels right now.
Recent overnight action, captured in this chart has brought price to within 9 points of the marked 50% retrace levels. Should this level be significant we could well be nearing the exhaustion point for this up move. or at least we can reasonably consider that the first attempt at this level will reject it... sure it could also smash through but the approach of price to this level is showing some signs of exhaustion.
The huge bearish engulfing candle at the point marked by 2 is quite significant and I beleive is still affecting this market and could easily be a pre cursor to a significant drop, as happened in much the same manner in May, followed by the rise then significant drop in June.
Not Drowning... Waving
It is not impossible, that in this trend up, we have mapped out or are in the process of mapping out 5 waves.
The isolations marked by 1 and 2 could be equivalent to the bottoms of waves two and four, with current up move being wave 5.
As mentioned in the previous post taking a look at the monthly, if as I contend the drop through 2007-2008-2009 mapped out waves 1, 2 and 3 of a 5 wave down trend, and we are currently in wave four (up) before a final wave 5 down... the final wave 5 down has to get strated soon, as if price gets much igher, it will start to impact in the area of the 2nd wave up within the greater downtrend (March to May 2008) and if that happens, the wave count, according to Elliot Wave esotericness is invalidated.
So if we are gonna start wave five down.. it has to happen within pretty much the next few bars...
There's a lot of bulls about right now, even a few stale bears turning bullish... Sentiment could be about right for a bit of bull smacking...
I think a stronger look at lower timespans might be the go to give us a few more clues in these interesting times... next post will tackle them.
(20min delay)