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Two more charts and another comment.
Assuming that the head and shoulders formation is complete (Murphy (1986)
suggests a 3% penetration or two day confirmation for assurance, which has not
been achieved at least from the currently drawn neckline, otherwise the
formation meets every criteria set out in Murphy and Edwards & Magee (1966))
one may anticipate a pull back to the neckline although that is less than 100
points upward. A pull back to the neckline is not strictly required, but the
decline to a major fibonacci retracement level suggests a level of support from
which to rebound.
TSE may go further and attempt to close the current gap as it did following
the first NT crash of October, 2000. This would involve an upward penetration of
the neckline which is rare in valid head and shoulders formations. Nevertheless
given the dominance of NT in the index (now 17% of the TSE according to CNBC,
down from 30%), aberrations have been experienced previously and may be expected
in the future.
The only good (bullish) hypothesis is that the fall to a 50% retracement of
the move from October 18, 1998 is the full move and that the broken blue line
(or the nearby fib retracement line) represents the limit of the bear.
Nevertheless, by reason of the wave count, I do not believe the bear market
for the TSE is over.
Subject to confirmation, I am looking for 7100 and the 20 year support trend
line before this is over (or until the charts tell me otherwise).
FWIW
Have a nice day. (
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