ASX ascending triangle observation

Good day all,

The past week I was busy with forex and gold charts. Made a few good trades, and decided to cash out before the week was over. I have been looking through equity charts, and was finding for any clear bearish signals. From what I am seeing, I have not seen clear-cut, short-term signals; however, I am obviously going to look for more downside in the weeks to come. It is definitely too early to tell if a reversal will take place. I have entry orders to catch strong selling pressure for equities. For now, I have an interesting chart to show you all.

The ASX – barometer for Australian stocks – has formed a good-looking triangle pattern. After the US debt default, the ASX traded in a rangebound fashion, and formed a neat ascending triangle. I was going to put up a post, but wanted to wait for a breakout. An upward breakout did occur (blue shade) but it did not have strong volume. True to theory, the ASX fell down and plunged 300 points downwards to where it is now. I classify this post-breakout pattern as a busted ascending triangle. I wish I had seen the failure of the upward breakout. Busted triangles should go in the opposite direction very quickly – very powerful moves. Once again, true to theory, the ASX plunged downwards fast. Anyways, what has passed has passed; we now look look for a target. Based on the triangle, the downward move is not complete. A target using the height of the triangle brings us down to the 3900 region. That is a good 3% + room left for downside – the figure 3 does not look so small once you start talking about CFDs and leverage.

So, I will look for the ASX to hit 4000 at least in the weeks to come.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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