Weekend Charting and Chat. 1/2 Feb. 2020, page-6

At the beginning of January, I believed the XJO would move up to 7,000 – 7,200. My actual target was 7,168 and the XJO rolled over at 7,145 before heading South with a bad case of the corona virus.
The initial fall following the virus scare was short-lived and my holdings recovered 50% of their losses the next day. The XJO tracked sideways for the last 2 trading days of last week with Friday’s candle suggesting Monday will be down. That was reinforced by the US market’s big fall Friday night, making it all the more likely that panic selling will be the order of the day come Monday.
I expect the XJO fall to stop at 6,965 or 6,870 but there are a number of potential levels of support after that. The market has been poised for a major correction (20% - 25%) for some time and something like the virus could be the catalyst – especially if reporting season is a horror story. That said, my personal feeling is that if the virus outbreak is controlled and/or not overly deadly, and reporting season is a mixed bag, my favoured target is 6,870. Wherever it bottoms I see prices heading for 7,300 - which is my current target for a top in the XJO. If it all goes to Hell in a handbasket then a major reversal has the potential to revisit 5,500.
As a note of explanation I have the XJO trading in a long term rising channel where 5,500 the lower boundary and 7,300 is just above the upper boundary. I believe a smaller channel (black diagonal lines) will carry price up to 7,300 eventually, however, if price falls down out of that smaller channel then I would expect the next major rise in price to stay within the upper boundary of the larger (green) channel. But, by then the top of that channel should be at 7,300 or a bit beyond.
I have stopped buying until the immediate outlook re the virus becomes clearer and sell as and when stops are broken. If the worst case scenario becomes likely then I may buy BBOZ.Could be a bumpy ride for the next couple of weeks.