XAO - Holding above 4500

The XAO has pushed higher as indicated in the last post, however, the next one or two trading days should provide a lot more clarity as discussed in the chart below. Today's action had many scratching their heads since the DJI was up 400+ points at the close, yet the XAO declined 49 points in today's trading.

XAO - 4500 is broken

In the last post I indicated that under an expanding triangle scenario, the XAO would need to come close to the 4500 level. Today that occurred, apparently due to 'concerns' about Greece, the new mining sector tax or potentially the weather :-)

Keeping above the 4500 level now is imperative for the expanding triangle to remain as a primary count - hence a series of clues will be provided by the XAO over the next few trading days.

A closer look at the final wave (e) leg is below. Under an expanding triangle, wave (e) should nearly always be the longest wave.

XAO - More Potential Upside

The XAO has been trending sideways since October 2009 which can be  representative of a large correction. This correction could be a (B) wave Expanding Triangle (as shown) or a flat [the first blue (a), (b), (c)].

As corrections can be difficult to gauge until near complete, following the trend using parallel channel lines can be very useful in determining individual segments of waves. In addition, the MACD Price Oscillator provides insight when waves are near completion (eg Extreme signal on completion of wave 3 at various degrees of time).

 The potential action over the coming weeks calls for a correction upwards in the short term and one final push down to compete the last wave of the expanding triangle (to perhaps the 4500 level). Should this not unfold, then the final wave upwards to wave 'B' circle can be assumed to be already underway.