XJO 0.99% 7,896.9 s&p/asx 200

In the Red - Wednesday

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    Good Morning and Welcome to the XJO Tuesday Thread

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    News for Today (AEDST)

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    The XJO closed a little higher on Tuesday, while volume (value traded) remained well below average.

    At first glance it all looks quite weak, a narrow spread upbar on massive volume last Friday...... suggests potential selling pressure.
    Then on Monday a bar that made a higher daily high, but failed to hold on to those gains & closed right down near the low of the bar....which infers that sellers are still holding the upper hand.
    Now on Tuesday, we get a very narrow spread up bar that closed in the middle on low volume... a potential lack of demand for higher prices.


    It just needs a widespread downbar to confirm the set up.

    However there is an alternative view (there always is.......)
    And that is that although there is supply (selling pressure) present, no doubt.
    In three bars it has been unable to take price much lower, and until it does break lower, absorption of the supply present has to be considered.


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    and interestingly,  Tuesdays Weekly Closing Chart shows where the bar four weeks back (circled),
    met enough supply to close that bar in the middle, and cause price to pull back and recover from the ordeal, haha.
    And this weeks completed bar has pushed strongly higher with a good spread, and the highest close on the chart.


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    which all leads to the 20min intraday chart,
    to see what that it has to say...... and  whether it can shed any light on the question of supply vs absorption.


    In a nutshell, although still unconfirmed, the absorption scenario looks to hold the higher probability here.

    It can easily be seen where supply knocked the unsuspecting widespread bar down to close poorly (inbetween the numbers 111 & 25).
    Until that point in time, price had been grinding steadily higher and all looked quite rosy.
    Then the supply came in & the last wave higher (25) showed a lack of demand, which indicated the Index would pull back.
    Since then price has moved sideways & easily enough downside volume has been present to break it down.
    However the Index has not broken down, and actually price has been pressing slightly higher.
    This 'pressing nature' with enough downside volume to break it down, suggests absorption of the supply present is taking place.


    One thing for sure though, price is winding itself up fairly tightly here, building up a store of energy (cause),
    so expect a reasonable move (effect) to come from this, & I suspect it may be to the upside.


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    Good trading and Investing

    .


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    Last edited by Jako8557: 24/03/15
 
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