Daily Indices Update: AUSTRALIA 200 (AUS200) |
By, James A. Hyerczyk
The Australian 200 (AUS200) index CFD formed a rare Gartley Fibonacci pattern on the 240-minute chart. The Gartley Fibonacci pattern is a reversal pattern that can appear in all time frames. This pattern is usually formed near important support or resistance levels such the 50 percent level of a major range. Once this pattern is confirmed, it typically reverses into a series of Fibonacci retracement levels.
The pattern that has set up is known as a bullish Gartley. It may not look bullish because of the lower-bottoms and the lower-top. However, this scenario actually helps form the reversal point at D. From this point, the market is expected to trade higher. The pattern may look complicated but actually is created by precise measurements of price and time.
Once Point D was identified at 4164.00, Autochartist was able to forecast a potential retracement of the break from the Point C top at 4324.50. These forecast price levels range from the .382 level at 4225.31 to the 1.618 level at 4423.69. A typical retracement is to the 50 percent to 61.8 percent zone at 4244.25 to 4263.19 respectively. Since the main trend is down, selling pressure may emerge in this zone. If buying power is strong enough, the market may rally through the swing top at Point A. A move through this level will turn the main trend to up.
Traders can either trade counter-trend for a quick rally into the series of retracement levels. Trend traders may choose to wait for the retracement then short the market in the direction of the main trend. Either trading strategy requires the use of stop loss protection.
About the author: Autochartist
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