Technical Analysis - Dow and All Ords

For those following the Dow Jones and the All Ords index closely, you would have noticed the week before last that as the Dow powered on upwards, the All Ords retreated slightly for a few days before following the Dow again. But be mindful that those are daily trends. So let's look at what the weekly trend show us, in particular concerning the small pullback we had a few days ago.

Alert: Gann date 20 Nov!

Indeed there has been a minor dip or change in trend leading up to this date. Is this a trigger for a major reversal?

The weekly chart of the Dow Jones below is quite interesting. See how it has just reached and touching the Gann-5 line. Gann analysis does not claim that it will bounce back down or break through. What it does show us is to get us prepared, if it breaks this line strongly, then go long. On the other hand if it tumbles from this line, it may be a shorting opportunity. The breaking of the Gann-10 angle in May 2009, shows an example of how it can break the Gann angle.

Errata: The weekly charts of the All Ords for previous posts has an error where the 20max envelope was shifted. The new graph here has been corrected.

Turning back towards the All Ords, if you look at a recent daily chart (not shown here), you will notice the formation of head - shoulder pattern with the peaks at early Oct, early Nov and during the last week where the last shoulder might be forming. Looking at the weekly chart, over the last few weeks, the trend has come off the Gann+50 angle. Not only that, but the 20max envelope has also tapered off its rise. This pattern has occurred once before in the bull trend started at March 09, and that happened in early July 09. If it does follow the July 09 pattern, it will power on ahead. On the other hand the recent movement may be a good setup for a strong decline.