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I understand the $ASX closes the week in 20 minutes. Well, the weekly candles are forming a nasty bearish Falling 3 Methods after a full bearish Engulfing. It means that at least one week of lower prices is (almost) guaranteed. Possible targets – on the monthly chart. Explanation – below. The bearish odds are very high.
The $ASX investors were warned by the candlespeak three! weeks ago.
Is $ASX a canary in a coal mine?
Below is the repost from Sep 4 when I issued Alert #2.
Two weeks ago I posted an alert for ASX based on candle formations. It still stands. Targeted decline – $7190-6915 or 6-10% off the top. The candles were serious on August 19. Let’s discuss the hypothesis.
Clear bearish Harami, the whole trading range of the red candle is contained within the previous green candle. A confirmation is still required. The odds are strong bearish.
After a very strong Bearish Engulfing on August 19, two weekly candles failed to cancel it and rather signaled a pause before moving further down.
Bearish continuation next week is highly likely.
There were 11 green monthly candles in a row, each closing at a new high. Candles say that after 8-10 such candles a reversal is, first, imminent and, second, possibly deep. I don’t know how ASX closes in September, but a green candle would be a surprise.
The technical indicators show their readiness to fall. How deep, that would be for the EW to guide.
I consider two possible counts for the formation.
Assume that wave off March 2020 lows is motive and ASX is at the top of wave 3.
Waves 3 are known for retrace of 0.236-0.382 (sometimes 0.5) of their length. Minimal retrace – 0.236.
If this is the case, we should expect a pullback into the area of $7190-6915, or 6-10% off the top.
Assume that the wave off the March 2020 low is corrective. It splits almost perfectly into a-b-c, wave a = wave c. Wave c is just a tad longer.
If this is the case, the most probable length for wave C would be 0.786 of wave A. This transforms into a possible drop to $5443, or 29% off the top. The retraces to 0.618 or 1.0 of wave A would also be possible. I put the red rectangle on the chart for 0.618-0.786 retraces.
On the daily chart, the pullback started on August 13 and formed a first motive wave down. Since August 18, the index were not able to start a rally (motive wave). It means that at least one motive wave is expected down in order to complete the correction.
We will see whether candles were right with the alert 2 weeks ago.
A harbinger for other major indices?
$ASX200 = Possible Major Correction = 19.08.2021 $ASX #ASX
Posted byDimonSeptember 9, 2021Posted inAlert, Candles Speak, World IndicesTags:ASX200
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