ASX200 Update March 2015 (D,W)
Created on Friday, 06 March 2015 01:56
Written by Austin Galt
Well, we got the fourth strike high right out of the gate in March which I believe puts in the top to the bull market that began in 2009. Let’s take a look at the action using the daily and weekly charts.
ASX200 DAILY CHART
We can see the fourth strike high hit on Tuesday 3rd March. This was accompanied by the expected quadruple bearish divergences on the Relative Strength Indicator (RSI), Stochastic, Moving Average Convergence Divergence (MACD) and Momentum indicators. That is bearish indeed and I think nails down the top.
The Bollinger Bands show the likely final high was at resistance from the upper band. The bands now appear to be tightening which is a sign of consolidation or a trend change. I favour the latter!
I have added two sets of dots for the Parabolic Stop and Reverse (PSAR) indicator which shows the tight setting support was busted on the high day and this was confirmed the next day with price busting the loose setting support.
Price has marginally broken the previous swing low made after the third strike high so we will have a lower low in place. And once that lower low is in place we will just need a lower high to form and the bears will really be growling.
ASX200 WEEKLY CHART
We can see the last stage of this move involved a parabolic move higher which is often found at the end of bull trends.
I have drawn a horizontal line denoting the August 2014 high and this move above there smacks of a false break top being put in place.
Also, I have drawn an uptrend line connecting the May 2013 and August 2014 highs and it looks like price has been putting in a false break top of this trend line for the last few weeks.
The Bollinger Bands show price has just started to move away from the upper band which is often one of the first signs that a bull trend is ending.
The RSI shows a triple bearish divergence at this top. Nice.
The MACD indicator shows the averages have diverged greatly which is also often found at significant highs.
And finally, this week’s candle is a bear reversal candle. Obviously more trading will be required to confirmed that and given the analysis already undertaken I think that confirmation is just around the corner.
In concluding, I believe the final high to this big bull market is now in place at the 5996 quote.