All Ord Triple Top Re-Confirmed, and Dow Jones does not resist

Source: http://ozstock.blogspot.com

Usually the charts are done at the end of the week to get the full weekly picture but since the dramatic drop over the last few days, the last point on these weekly charts end in the middle of the week.

In the last post, the All Ords were on the verge of confirming a triple top but the Dow did not show any similar patterns. For over the last month, the All Ords had been fighting the Triple Top and showed signs of successfully resisting a Triple Top plunge as it climbed up from the 4300 level. However, things changed in the last week and as of today, it seemed the market is plunging back down. In fact the closing of today has broken the previous month's low of 4325. The chart also shows that it has broken through an important Gann angle. At this point the signs are now quite strong for further downtrend.

In terms of the Dow Jones where previously, it was not near any support or resistance, the lastest chart shown here indicates that it is touching the Gann (brown) angle. The minor recovery over the last month followed by the subsequent downtrend provides strength to break this Gann angle. When a Gann angle is broken, the trend will continue in that direction until the next angle is found. The fundamentals of the world economy and sentiment also provide strength to the downside.

Whereas before the Dow and All Ords seem not to coincide with each other, the current downtrend is supported by both indices and may be a confirmation of strength in the current direction.

All Ord Triple Top Confirmed, but Dow Jones Hold the Key

Source: http://ozstock.blogspot.com

At the end of this incredible week which saw both the Dow and the All Ords (as well as many others) plunged, the Triple Top of the All Ords has been confirmed. However, caution is in order as this is still a newly confirmed Triple Top and may turn around suddenly. Nevertheless, W.D. Gann and David Bowden recognised that Triple Top is one of the safest signals for beginners to trade, even more so than a Double Top, because when these signals are met, they are most likely to continue on as expected.

To avoid being caught out, decide on a suitable Stop Loss if your are going short. The level of stop loss depends on your own risk-reward apetite. Some people place stop loss at a certain percentage of their expected loss, for example you can put the stop loss at a price where you would lose 3%, 5%, 10%, etc. Others place their stop loss based on special points on the charts. For example with the Triple Top, we may choose the previous Low point as the stop loss which is in the week of 1st Feb 2010 at 4532 points.

In addition to the All Ords Triple Top, we also see the chart breaking the all important Gann 1:1 (brown line) or 45 degree angle. This is the angle of great strength where support or resistance will be tested. Again, it has only just broken this angle, so cautious trading with Stop Loss is prudent.

The Dow Jones on the other hand, does show a correction after coming down strongly from the yearly high. However, it has not formed any significant Double Top or broken any Gann angles. It is however approaching another the Gann +10 angle where it may find support or it can breakthrough.

The Dow tells a cautious story. As the All Ords seem to show signs of an emerging bear market, perhaps we have to look towards the Dow as a final confirmation as to whether both markets will go down or pull up from here on.

Technical Analysis - All Ords Triple Top and falling ABC Swing Signal

The chart of the Australian All Ordinaries show a few indicators together up until 19 May 2010.
This has been an incredibly volatile few weeks and some major signals are on the verge of being established, if they have not done so already.

1. The Triple Top - the most recent top seems like the biggest of them all. A double or triple top is one of the easiest way to profit according to David Bowden and WD Gann. But to be sure it is a triple top, its recent downward leg has to break the other two bottoms on Nov 09 and Feb 10. The recent lows has passed that slightly. This indicates a short signal - but remember the stop loss.

2. Swing Trading - ABC - This is another easy way to identify a trend. As indicated on the diagram, when the graph moves from C downwards and passes B, then it is time to sell. Notice the ABC is based on the swing chart of the daily graph.

3. Price Retracement - the scale on the right hand side indicates the current price has broke through the 50% retracement from the major high in 2007 to the major low in March 2009. The 50% is a strong resistance and support line and according to W.D. Gann, once it breaks through, it signals a strong trend.

4. Finally the graph below is the Average Directional Index - ADX - this indicator is not a commonly used one, but practitioners who use this indicator have done it quite successfully. Basically, for a downtrend to be established, the ADX (blue line) must be above 40, as it is now. This shows the bear trend is very strong. In addition, as the ADX is rising while -DI(green line) and ADX  are above the +DI (red line), it is a strong indication of sell.

There are many other indicators, but the four above combines the simple and proven ones as well as the more advanced ones, and they all point downwards.

Dow and All Ords go separate ways?

(source: http://ozstock.blogspot.com )

Despite a few hiccups, the market has been going quite steadily upwards. Even news of volcanoes, civil unrest and the Goldman suit could not hold the market down. This is true for both the Dow Jones and the All Ords up until last week.

Looking at the weekly charts below, the Dow is powering on quite strongly. Looking at the Gann chart below, it has clearly moved part the resistant Gann-5 angle and is between two other Gann angles. There is no indication that it will hit a higher resistant angle soon.

The All Ords present a slightly different story. OVer the last week, daily trades showed symptoms of nervousness. The week ended slightly lower. While one down point does not determine a change in trend, the current position of the All Ords looks as if it is forming the third peak of a triple top. To confirm a triple top we need to wait for it to pass the bottom of the triple top formation which is around 4500.

If a triple top does form for the All Ords, it will represent a strong decline. At this moment with the Dow heading up strongly, the notion of the Dow and All Ords going in opposite direction is difficult to imagine. The other likely option is that one of these two will have to change its direction.