“We took a look down yesterday not quite making Trend Support which has moved up to 4358 for today’s session. This is encouraging so at the moment it does still look like dip buying is the way to go. If we pushed on from here we would be watching to see if we can take out our Marabuzo line from Wednesdays red candle at 4526. If this were achieved then we will have missed the dip and we would have confirmed another higher trough. (See Charles Dow) We must not forget though that we have Tuesdays high at 4649 giving protection to the massive 4688 resistance which was a dramatic failure high from the 4th of November”. Friday saw the Bears in the driving seat again but overall there is no change to the comment with Trend Support now up to 4379.
Indicators in Play
Charles Dow defined the basic principles of a Bear market as one that is producing lower peaks and troughs on each swing. The opposite applies in a Bull market. Trend Support Lines are probably the most basic and easy to understand tools in Technical Analysis. Its just a matter of joining higher lows together with two and some prefer three points of contact. The more dips that touch
the line and the longer the support has been in play increases the potency of this type of trading tool.
Summary
We are sticking with the dip buying stance to trend support which is now at 4379. If this were to give way we would exit longs and go to neutral. The market is basically ok whilst above 4160.5 but we would most likely see this tested if trend support gave way.
