Summary for Week Ending 28th January 2006
There was not too much on the news front last week, so the market was mostly trading on its own. last week I said I was expecting another day down before the rally, and that sort of happened but not the way I was expecting, but more on that later.
Lets look at the last week.
Following on from the big wide range day of the previous Friday, we had the week start with an inside day
which was not al that unexpected, as there were probably more that one punter out there looking to catch their breathe. the surprise for me was the UP day on Tuesday as I was expecting the market to find a bottom early and then rally, but the market then followed the up day with an outside day to a new low, but this was briefly held before rallying. Thursday and Friday saw solid gains to the upside, and the market is now around the level that I set out on last weeks chart. This is no surprise here as it is around the level of the swing high prior to the decline, so I would expect some kind of resistance at this level.
So where to....
The only thing that worries me about my short term forecast is the fact that the market put in a slight false break on Wednesday, and this is usually a signal of exhaustion and I would be expecting the market to take off after seeing one of these. Also volume has been solid in the rally, but I am yet to be convinced that we have seen the last of the declines just yet. Any weakness will more that likely be seized upon, and the market should then follow the forecast path down. The issue here is time and there is plenty to be used up, and I don't expect this time to be used up in a rally. If this is the last rally prior to major congestion and correction then I would expect this to happen very quickly, and that means a short amount of time, and if this is the case then the correction should be a larger period of time , which enables the market to build up steam before the explosion. That's the idea, however a break above the highs and this scenario is partial shot, so we'll just have to wait and see what the weeks brings in.
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