Where to for the XJO – is it time to go short? for ASX:XJO by NicktheTraderGuy

Where to for the XJO – is it time to go short?


Where to for the XJO - is it time to go short? for ASX:XJO by NicktheTraderGuy

I note that there is a lot of noise in the financial media currently around potential collapses in the Chinese property market and various other factors, but let’s screen that out and have a look at what the XJO chart is showing.

From the chart, it looks reasonably apparent that a downtrend has started forming, starting from the most recent high of 13 August. The chart shows that following the open on 14 August, the market failed to make a new high and started trending downwards for the following week.

Fairly solid resistance was then found at around 7460 on 19 August with several retests until around 9 September (between these dates the market seemed to be trading in a fairly tight 60 point range). On 9 September the support level was broken and for the following week or so (until 17 September), the previous support level providing resistance, with another support offered around 7360 (the close on 9 September).

Today’s movements seem to pretty clearly break through that resistance, but we’ll need to see what tomorrow brings to see if there is confirmation of the breakdown.

Other things that I note on the chart are the 20 and 50 day MAs. To me, it looks like the 20 day MA will likely cross the 50 day in the next day or so (a bearish indicator in my view).

All in all, for me it’s not wholesale shorting time until the 200 day MA is broken at around 7000, but there may be opportunities in the short term if you’re looking for them.

So in summary what visible to me on the chart
* A clear downtrend indicated by both MA slopes and a pattern of Lower Highs and Lows
* Two clear breakdowns from ranges, with support flipping to resistance.
* MA crosses likely.

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