Alokdhir..in answer to your question. We are seeing the bears claws and the mauling of investors..Remember the bear is irrational (fundamentally my quote:..The bear can't count)..We maybe be near Bear market Cycle phase 2 which sees the bear calming down for a while and investors will come out of hiding and create a relief rally just how large any relief rally is depends on the news..all you need to know is the market is still a bear and the next tantrum will create a lower low..
Perhaps 4500 is the point where investor relief starts..time will tell.
If a rally starts from 4500 expect disappoints on the way.. Don't expect it to go through many resistance levels. Most bear rallies fail at the next major resistance level (4800)..There are a lot of minor resistance levels above 4800 so the index has to have powerful buyer momentum to push through all those resistances to reach 5050. Although anything is possible it is asking a bit much when in the NZ50C is a bear......that's the statistical result fact
From my post #10716 The descending triangle pattern formed during a down trend is considered a continuation pattern in other words the chances of the NZ50C index breaking out below the triangle pattern has far greater odds than breaking out through the top..
How is this worked out?...Many people do statistical analysis of 10 of thousands and maybe hundreds of thousands of each pattern to determine the odds..One of these people has book and Bulkowski's
The Pattern Site is must see for anyone interested in TA charting.
To get a basic understanding of charting..Charting displays the past up to the present day of all buyers and sellers grouped together..This is the psychological trading behaviour in a graphic form. Strangely most people believe in the written alphabetic form but most dismiss (skeptic) the numeric or visible form ..even though they believe that a picture can be worth a 1000 words.
Predicting in charting is based on the results of 10 or 100 of thousands of past results to obtain a statistical result (probability of a happening).
My chart shows a descending triangle breakout and the statistical probability of after the fall buyers start to become excited again (psychological) and start to influence the market with their buying. with NZ50C that should start around the 4500 level..This is as long as there isn't any sudden bad news...this could be the Stage 2 developing when we see an end to the latest sharp drop and replaced with a few sucker rallies Usually during a Bear Market Cycle (early stage 1 phase) it takes a while before investor denial dissipates ..The media displays peoples feelings so when people are in denial the news is usually more optimistic than it should be and we hear more good news than bad news..
We have reached the point of the Bear Market cycle (late phase 1) where the investors are starting to realise..so the denial is dissipating..the media reacts according and starts to publish more bad news than good news and so the fulfilling prophesy begins with capitulation waves before the commencement of Bear Market phase 2 which sees investor relief after the capitulation waves. On the chart it is easy to see the Bear Market phases because of its vision showing the past behaviour..but when the Bear Market Starts at that time it is impossible to see it as it looks like one of many bull market cycle corrections..It's only when the Bear Market cycle matures towards stage 2 that we get the feeling that the bull might be dead..
Originally Posted by winner69
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if you can't see the chart please click the link) read the purple text near the right hand bottom of the chart.
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