Starting off with the weekly chart, we can see how price rebounded off the upper bollinger band but has now retraced to the 20 period moving average forming the center bollinger band where this line has created a confluence of support together with the 38.2% Fibonacci retracement level. The stochastic is not quite confirming a possible support bounce as yet although it has started working off its overbought condition.
On the daily view, the bounce out of oversold conditions is clearly shown as well as a bullish stochastic reversal playing out. We can also see a potential positive reverse divergence (as indicated by the blue lines) playing out.
The support and resistance on an end of day basis is seeing us approaching the 47,000 overhead resistance level and the first order of the week will be to see whether the Top 40 can break through this level with a positive daily close. Interesting to note that the recent reversal off the 46,000 level on an end of day basis coincided with the 61.8% retracement level. A solid break north here could see coinciding with the potential for a santa clause rally could see a move back to previous highs near the 49,000 level by the year-end on a more medium-term basis.
Putting all of this together, on balance the picture has shifted to a more bullish outlook with the key being the regaining of the 47,000 level as support early in the new week.
An interesting day as the T40 finds resistance at that 47,000 level. Its not quite reversing off that level and actually held up well at the close painting a daily candle with a very long tail as the bulls pushed the market up from intraday lows into the close. The daily stochastic is advancing upwards very swiftly at the moment as well. On balance indications are that there is a decent probability of upward break coming through tomorrow - the key being a hold above that level
ReplyDeleteDo not predict,do not predict. do not predict. This should be the mantra chanted each day as the T40 moved contrary to expectation with the support and resistance graph now showing a clear reversal off the 47,000 resistance level. Overall there's been pretty much a sideways - albeit slightly choppy - move over the last week and although the daily stochastic remains bullish, things are pretty much confined to the 46,000 - 47,000 range which will form natural trade targets until such time as we move out and hold above or below these levels on either side
ReplyDeleteThe sideways chop continued today with a very tight range inside candle being painted as the market refused to take a decisive direction pre the US Thanksgiving holiday tomorrow. The stochastic is now pretty much completely neutral and so yesterday's view on the channel range and how this plays into our trading strategy remains valid.
ReplyDeleteStill no clear direction yet. Despite the positive day which saw the stochastic resume its upward bullish trend, the market again breached the top of the channel intraday but then pulled back from its highs to end below that level.
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