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  1. 6,243 Posts.
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    A bit of soothsaying.

    Interesting action today. I was out so didn't see any of it but I have been expecting some capitulation selling from our big volume day the other day. 2 reasons, firstly because it reliably happens after excessive move days like that - there's a significant portion of that sort of volume that is just short term trading, some get out same day, others t+3 but still others, the inexperienced, hold on in hope after t+3 but then get forced to sell. We hadn't really seen the latter but I think we saw some today.

    The second factor was that the price had moved too far from the averages and needed to consolidate. On the chart below you can see 13 day weighted moving average (yellow), 50 day wma (black), 200 day wma (red) plus Bollinger bands with a 20 day moving average (both green).

    We are in an uptrend now with the 200 day wma rising and the 50 day wma having crossed over properly in September. You can see that the low of the day has hit the 50 day wma and bounced off with immediate support. The 50day wma has been significant in much of the period since Aug/Sep and particularly since start of Dec. I expect the 13, 20 and 50 day averages will move closer together now over the next couple of weeks as the price consolidates sideways. In that time the money flow index that I'm following or other similar indicators like RSI should track towards oversold. Then I'm thinking it will have a good chance to commence another leg up, probably from around 1.3-1.5. If it can break 2.4 then over 3 will be on the cards.


 
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