This is very exciting times, not because of my investing position, but because of what's coming ahead. I will explain why it is time to go short. But before that, I'll candidly reveal that for the past 2 weeks I went long thinking that the correction was minor and will turn upwards as we have seen previously over the last few months. So that was my mistake, not too costly if I get out soon, because the pattern after just last week is almost a classic double top setup.
Anyone who has been following David Bowden or Gann's techniques realise the double top or double bottoms are among the easiest signals to trade because a few things need to occur before we can conclude the double tops or bottoms.
The Aussie All Ords has just form a double top at the end of last week, in fact it is on the down-leg. The double top setup consist of the first top, around early October, then hit a low around November and climbed to a top in early January. Since then it has declined with full force and the current position is slightly lower than the tip of the double top. This shows the second top has a down leg which has broken an important support position. If this double top is like most others, given current position, the only way is an emphatic downward move. If it goes a little further to break the brown Gann angle support, then it will go down further.
Interestingly, the Dow Index does not show a double top. What it does show is that it had just broken back down the Gann-5 angle. Not too long ago, the Dow powered upwards and broke the Gann-5 angle, but that was short lived. It then reversed and came down to break the Gann-5 angle and now it seems the Gann-5 has become a strong resistance. Although we should wait a while, and Gann himself would suggest we wait, the trend is now on the downwards.
So to play safe, we can wait a week or so to have confirmation of a major correction to come. Those who have the risk appetite may choose to go in soon.
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