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Summary for Week Ending 17th April 2004
This week we finally saw some of the gloss come off the preceding rally, a fact that was not unexpected as I mentioned last week, that the run upwards could not be sustained with the same strength. Once we saw on Monday that there was no strength left, Tuesday saw a sharp decline of a considerable magnitude, enough perhaps to rattle the weak at heart. This was followed through with the next couple of days and rounding out on Thursday, giving us a total of 7 trading days down, prior to Fridays weak rally.
Following on from the above observation, we had 7 trading days down in this movement, balanced against 8 trading days upwards, representing the previous swing - 24th Mar : 5th Apr. Looking at Calendar days we are looking at 10 Days down balanced against 12 days up (This weeks chart). If we are taking the Price balances time approach we can take the point of view that the market went up for 12 calendar days, and the resulting correction took 10 days which is close. What is important to also look at is the depth of the correction in the time frame. Looking at this weeks chart we can see that when the market is given the same amount of time to balance out, it didn't even make it to a 50% corrective level. This in itself indicates strength and the possibility of more rallies to come. Also the 7 Trading day correction is within the boundary of an acceptable counter-trend movement.
Taking all of the above into account we also have to balance off the fact that we have a clear cut, lower swing high in place and this is what provides the temperance to being wildly enthusiastic. Following on from last weeks scenario of further gains, we can apply a range equality to the upside which highlights the 1185 area as possible resistance, this would also follow with a false breakout pattern, bearing in mind that this rally started with a false breakout to downside (Oct 2002)
Looking ahead I will be watching to see if the rally ( perhaps ) that started on Friday, can make it past the 1151 level. If we get past this point, I would be looking for the movement to continue to new highs over the next week or two.
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