We suspect the corrective rally for the ASX200 (XJO) from 5150 to 5550 is near completion which should be followed by a 5200 to 5450 range bound market over the next 2-3 weeks before another leg lower towards 4900.<\/p>\n
The view is based on our rising wedge and wave count assumptions. We suspect the break lower from the 12 month rising wedge pattern implies a target near 4900. In wave count terms we are assuming the XJO has traced the first leg (A wave) and is completing the (B wave) in a series of three waves towards 49.00.<\/p>\n
It is also worth noting that the recent rally has pulled back to the break level of the wedge pattern around 5450\/5500. At times these break levels provide turning points therefore we suggest watching for sell signals over the next 1-2 weeks while trading above 5550 for two weeks negates our view.
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