Today (Tuesday 4th March 2008) the S&P/ASX 200 Energy (XEJ) index closed down 203 at 14,787.
The XEJ has been locked into a 6-week, Rising Wedge area of price congestion which commenced on 22nd January 2008.
Rising Wedges are common occurrences in Bear Markets.
As they are generally negative patterns, the probability is that the XEJ will soon break out of this Wedge formation on the downside.
Because of the Five-Point Reversal (the Broadening Top indicated by the 5 numbers on the chart) there is a clear probability of a severe correction ahead.
If the XEJ begins to collapse, it will probably go down, on balance, to at least the 12,150 level. Already there are technical reasons to suppose that the drop will be much greater than this once - and if - it gets underway. However, I believe it is best to take one step at a time and now wait and see how events unfold.
James Leo Donoghue
donoghuetechnicalanalysis@gmail.com
The XEJ has been locked into a 6-week, Rising Wedge area of price congestion which commenced on 22nd January 2008.
Rising Wedges are common occurrences in Bear Markets.
As they are generally negative patterns, the probability is that the XEJ will soon break out of this Wedge formation on the downside.
Because of the Five-Point Reversal (the Broadening Top indicated by the 5 numbers on the chart) there is a clear probability of a severe correction ahead.
If the XEJ begins to collapse, it will probably go down, on balance, to at least the 12,150 level. Already there are technical reasons to suppose that the drop will be much greater than this once - and if - it gets underway. However, I believe it is best to take one step at a time and now wait and see how events unfold.
James Leo Donoghue
donoghuetechnicalanalysis@gmail.com
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