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Summary for Week Ending 8th May 2004
After the finish of the previous week resting just on a support trend line, we saw the expected bounce forwards. This in itself was not convincing to begin with Monday being an inside day followed by a decent rally on Tuesday which triggered a new swing. If there was going to be anything in it I would have expected the market to get on with it and push for another UP day on Wednesday but instead we saw an inside day which was not a good sign. In trading days we had a 2 day counter trend rally ( if you count the initial inside day) and on Thursday we saw a solid decline and we were at new swing lows in 1 day and again below the supporting trend line. This was further consolidated on Friday with another solid move downwards and a breaking of the sideways expanding swing pattern.
Last week I mentioned that there would be some resolution to the expanding pattern and we got this on Thursday and Friday and we are now at a new swing low BUT we are still above the March swing low. The pattern is now a stronger look to the downside but its also worth noticing that the rally to Wednesday cut into the range of the previous decline. If we see a swing pattern where the swings clear the boundaries of the previous swings then we have a pattern showing serious intent. We do not have this at present, however we cannot ignore what we can see. Also last week I mentioned that Thursday Friday was a chance for a change in trend with time closing in of a previous range as well as close to 30 solar degrees since the decline began. We had a strong low on Friday but we would need to see a strong sustained rally to confirm if the change of trend was indeed real. At present it would be a high risk bet and as such, I never place much faith in TIME only based market calls.
Looking at this weeks chart we can see that its fairly busy. Of Interest is the 40 point range of the previous week added to the Tuesday high brings up to the area of the March low, which would also be the next major area of support. Range equality ( 76 points ) doesn't ring any bells. There is a weak cluster in the 1059-1062 band. Looking ahead, as we have no real reason to doubt it, the downside looks the most likely result. If the decline fails to make it back to the March lows for a retest, then we would be looking at a strong pattern to the upside and it would be explosive. Again this week, my primary problem is the time being used up in this decline. There has been considerable opportunities to blast through, but at present we have yet to witness this. Looking at the downside potential the big signal was again this week when we had a short rally that was wiped out in one trading session, so no-one want to be long either. This is becoming a far more interesting market to watch.
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