Wednesday, June 24, 2009

XAO - Still declining from a short term top

The XAO is still declining and the next several days will help determine what wave structure unfolds. Ideally, the wave count shown should unfold and provide a short term bounce.

However, I'm also half expecting this leg to sub-divide further and potentially drive thru the 3700 support (also 38.2% retracement of wave 'C'). If so, then I would be tempted to label this leg down as wave 'a' circle once this leg completes. Under this scenario, 3500 would be a potential target area for a bounce.

Overall, the key is to see a 5 wave decline from the end of wave 'C' in order to expect a short term bounce upwards.

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