We breached Trend Resistance yesterday and pushed on towards our 919.25 level just falling short. Early trade today has seen us give back some of these gains and we shall now be looking for the old resistance line to act as support using the change in polarity principle. This comes in at 887 but as it was only a short term tool it should not be relied on too heavily. Other than that the picture remains unchanged with the Bulls in the driving seat at the moment but the Bears still hold control in the bigger picture.
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. The Change in Polarity Principle sounds rather grand and impressive but it really is quite simple. When a market has been obeying a Trend resistance or support line for some time and then eventually breaks, this line turns from friend into foe or visa versa.
“We are happy to dip buy although we may have had our chance last Friday. We would also consider dipping out toe on a break of trend resistance. Any longs would be exited on a print below 829”. Trend resistance did break and we maintain a stance of buying dips for now.