XJO 200, Weekly, 12 months, Candlesticks, June 23, 2012
In the past month this index has been consolidating just above support at 4000.
Tentative movements higher and lower have not been sustained.
It would seem that bearish traders are fearful of getting caught out if an upward breakout were to emerge, whilst those with bullish sentiments are still not convinced that global economic woes have ended.
The longer the market continues to mark time in a sideways pattern, the more explosive any breakout is likely to be.
Rather than trying to pre-empt the market and set a proactive position, it would seem to be wiser to wait, and be reactive to change when it eventuates.
Unfortunately technical analysis is next to useless in predicting which way the market will head. Don’t be surprised if there is an initial false move in one direction, before finally settling to move in the opposite way.