Summary for Week Ending 5th March 2005
Last week I mentioned that should the market consolidate the previous weeks upwards momentum, then we should see the old Jan 3 high surpassed shortly. Well we didn't have to wait too long for this to happen and it was Friday that saw the market shoot up to the new high. For most of the week, the market did appear to be trying to decide which way to go, the evidence of which was the market trading the same price for 5 days prior to the Friday jump.
So now we have a new high, what comes next ? Since we have only just touched the old high, the most obvious reaction is for the market to peel off a little, or just hang sideways. The area is a level of obvious resistance, the emphasis is on obvious. So what is obvious resistance ? Its a resistance level that EVERYONE can see, and as such they rarely hold, but the beginner is always tempted to bail and even perhaps go short. Its a mistake. The other point to make here is we also now have a double top, but do not think for a minute that this will hold either, as it is always safe to bet against a double top ending a run. If you must look for a lower top, look for one AFTER the high, ie a lower top.
Next week, I am expecting things to be a little slower as we see the market react to the old high. The dimension in both price and time is indeterminable, but the false break scenario is certainly still on track. This week chart gives the next likelihood which is also looking more like the market compressing.
Regarding the ALL Ords, last week I said that no one wants to stand in front of a moving train, no matter how well you worked where you think its supposed to stop. The market this week went for another gallop, so we'll just have to sit back and watch for a little longer.
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