Market Focus, March 1

Is the up-trend resuming?

Is the up-trend resuming?

XJO Weekly chart, Mar 1, 2013

The week just finished, March 1 2013

On Thursday of the previous week (Feb 21) a pronounced sell-off  halted an extended impulsive uptrend in the ASX 200, and might have initiated further falls. This has not eventuated

After that week finished just above the 5000 support level the first three days of this week saw this support level hold, and prices remain above the support of the trendline.

Sellers dominated trade Thursday 21, but Thursday 28 saw buyers take control, shrugging of renewed European debt concerns over the hung parliament Italian election result.

Buyers only just managed to push the index above the previous high to 5112.5 berfore falling back to finish the week Friday on 5086.1

The gain for the week was a healthy 68 points, and continues the strong impulsive move higher on the weekly chart. (see Weekly Chart)

What might the market do this coming week? 

The Daily Chart shows three technical features worth noting, showing lingering market ambivalence.

  1. The high of this week was only 6 points higher than the high of the previous week. If the market moves lower this coming week a double top will have formed, suggesting reversal of trend.
  2. Friday’s candlestick can be called a paper umbrella, with a small real body, no upper shadow, and a relatively long lower shadow. An end of the week sell-off was halted when  buyers saw the lower prices as a buying opportunity.
  3. Thursday and Friday’s candlesticks in combination form a harami (the word means pregnant) which also warns of possible trend reversal.

Trading early in the week may well clarify whether the uptrend will continue or not. Lower prices, particularly falls through trendline support, and support at 5000 would suggest  change in trend.

However it is hard to see the strong uptrend reversing this week.

Categories: Chart Analyses, Technical Analysis


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