XAO Short Term Update

The XAO has broken above the upper channel line after finishing a small triangle for a triple combination correction.

The overall assumption is a larger triangle is developing as described in this medium term update, this is based on the fact the last several up/down legs in the longer term sideways structure are corrective - and a triangle does make sense at this point.

A small pullback may be needed in the coming days (shown) to provide some definition to this wave 'D' upwards leg. On the downside, breaking below the down sloping support line would raise some serious questions on the validity of the count.

Short term XAO update

THURS UPDATE: It appears a very small triangle wave 'e' has completed after all, and the XAO has broken above the channel line. Next leg up now appears underway.

The last several trading days have not provided clear impulsive patterns higher, suggesting corrective action is ongoing and thus brings a clue - raising a strong possibility an Elliott wave triple combination corrective pattern is unfolding for this entire leg down. An ending triangle will appear at the end of triple combinations, however there tends to always be a challenge with triangles and how they play out - sometimes triangles can form one of the waves within a triangle itself. Hence, the chart below provides a rough idea how the triangle is unfolding

The down sloping channel lines now have a role to play - a solid break out and higher after the triangle completes will be a strong signal. However, there will possibly be a false break that can sometimes occur with triple combination. Supporting an end to this correction is the MACD price oscillator as it is clearly divergent on the 60min chart (not shown) since the second week of June.

The bottom line: A change in trend appears to be close at hand

XAO - Triple Combination

Based on the short term waves, I'm really not satisfied that we're seeing impulse moves upwards in this latest rally. Even though at first glance 5 waves appears unfolding. In any event the answer should be with us very soon.

What may be unfolding instead is a triple combination - three 3 wave moves (with intervening 'X' waves) with a triangle for the last wave. Double combinations are more prevalent on the shorter term waves, so seeing a triple at this scale would be interesting to see confirmed.

Because of the triangle at the end of these corrective waves structures, many analysts will believe a wave 4 triangle is unfolding and expect another leg up.

If the above analysis is correct, we should see the rest of the triangle play out (tomorrow hopefully), and then a strong thrust to the downside once completed.