ASX 200 threatens a bear trap

The ASX 200 broke through short-term resistance, a bullish sign, and is testing long-term resistance at 5500. In terms of classic Dow Theory, the primary down-trend is intact until there is a breakout above 5500. Today’s small doji candle indicates hesitancy but bullish divergence on 21-day Twiggs Money Flow signals medium-term buying pressure. Breakout above 5500 would also complete a bear trap, where breach of support is quickly reversed and followed by breakout to a new high. This is a powerful bull signal and would offer a target of 5800* for the primary advance.

ASX 200

* Target medium-term: 5500 + ( 5500 – 5200 ) = 5800

One thought on “ASX 200 threatens a bear trap

  1. ColinTwiggs says:

    Correction: “bearish divergence” should read “bullish divergence”.

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