Tuesday, December 20, 2011

XAO Short Term Update

The XAO is still applying the finishing touches on the last wave of a Double Three Correction. However, caution is required as triangles can sometimes be unpredictable, leading to premature or late entries. 

It's also possible that the Triangle (on the 16th Dec) has completed and a decline to 4000 and below may be approaching. A drop down to 4000, then a solid break below this level would be an indication the bears have arrived.

Wednesday, December 14, 2011

XAO Short Term Update

The previous post covered Double Three Combination corrective waves and provides insight on what may be unfolding on the XAO right now. The sideways action on the XAO since the beginning of August without any clear 5 wave impulse moves (in either direction) could signify a Double Three correction.

The next steps for the Double Three would be to complete the finishing touches on the triangle (wave y), keeping in mind it's entirely possible that one of the legs in the triangle could be a triangle itself as discussed in the post linked above.

Tuesday, December 13, 2011

Double Three Combination Corrections

I thought this to be an opportune time to cover Double Three Combination Corrections (there may be a need to brush up on this type of correction very soon)

Double three's are some of the more complex corrections, but if caught early can offer insight to the unfolding wave count and allow one to be in a position to capitalise on the break out. They are usually rare on the larger time scales, but having knowledge of these structures will be useful for when they do occur.

Below is an example of a Double Three on the XAO taking over a month to complete. Without the labels, it can be a little difficult to see. The give away is a long sideways move that consistently moves in waves of 3. Initial interpretations may be a triangle, however, the expected end and break out of the triangle doesn't appear as one expects - leading to several re-evaluations of the wave count.

With the Labels added, the double three is clear. There's even a Fibonacci relationship between the waves - although it's not guaranteed every time. A confusing factor in this example was a triangle for wave 'b' '(b)' in the 'c' leg of the Triangle itself.

The larger picture shows the Double Three is the b wave in a zig-zag correction. This whole structure was the A wave in a triangle that formed over several months.

Tuesday, December 6, 2011

Interest Rates

The RBA announced today a drop of it's cash rate target to 4.25% - inline with the expectations from my June post on Australian Interest rates.

The 90 day bill rate has been steadily dropping down to 4.56% (as of yesterday), hence the RBA decision to continue to lag the 90 day rate is valid since there is no meeting next month and the global economy continues to weaken.

However, longer term, rates are expected to drive higher - perhaps much higher.

XAO Short term update

The XAO bearish short term count needs to be approached with caution since the expected aggressive downside action has failed to materialize. What is apparent is either a smaller wave 'ii' flat that has now completed with the bears moving back in or, a large wave '2' correction that could be a double combination correction and has further sideways to go that will take it into Mid-Late Jan in 2012.