![\"\"](\"http:\/\/www.fnarena.com\/ckfinder\/userfiles\/images\/ffxjo66.jpg\")
<\/p>\nBy Nick Linton-Ffrost<\/p>\n
Over the last two weeks the ASX200 (XJO) has failed to break below four month lows around 4900 and has traced out a five wave rally to 5050.<\/p>\n
Based on these these indicators our best guess near term scenario is for a 1-2 day rally to 5100-5125 followed by a 3-5 day descent to 4900. Our 5100 target is where wave 5 = 1 and the 5125 target is the height of 4th wave added to break point.<\/p>\n
The 4900 pull back target is based on our rule which states that after a 5th wave completion the market pulls back to the bottom of the 4th<\/p>\n
If the XJO does pull back to 4900 we will counting that as the ‘B’ wave within a three legged corrective rally to 5300-5400 (where C=A). Our upside target range derived from our rule which states that after a failed break below a sideways pattern the market returns to the top end of the pattern.<\/p>\n
Our ‘C’ bounce assumption to 5300-5400 will be negated after 3-5 days trading below 4850-4900 and would turn the odds in favour for a 3-4 week decline to 4500-4550.<\/p>\n
\n<\/p>\n
\nAnother trading idea from<\/strong><\/p>\n Fifth Wave |<\/strong> fwtc.com.au<\/strong><\/a> <\/p>\n FW generates over 150 Trading Alerts on the ASX100 each year. We are a subscription service specialising in short term technical strategies based on 27 years experience<\/strong>.<\/strong><\/p>\n AFSL 319830 |<\/strong> Disclaimer<\/strong><\/a><\/p>\n Reprinted with permission of the publisher.<\/em> Content included in this article is not by association the view of FNArena (see our disclaimer<\/a>).<\/em><\/p>\n Technical limitations <\/strong><\/em><\/p>\n If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.<\/strong><\/em><\/p>\n