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Some of our Platinum traders were watching the February seasonal date recently for a potential turn on CBA. Instead what occurred was an excellent example of the breaking of multiple bar chart tops. You can read Section 10 of the No 1 Trading Plan for details on this type of advanced setup. Have a look at Chart 1 below to get the picture. Notice the equal bar tops are above 75% of the previous weekly swing range repeated from the January low.
Chart 1: CBA Daily Price Chart
click chart to enlarge
Looking through our highs, lows and ranges resistance cards, I could not find a cluster of price resistance to hold these tops, so I was expecting a possible false break to the 100% level. If that lined up with the seasonal date then I would be looking for another short trade.
What ensued was a move up through 100% on 8th February to sit level with the double tops from last August and September. Could this be the turning point we’re looking for? We have price resistance (old tops) and we’re not much past the seasonal date. Chart 2 shows how it was looking on that day.
Chart 2: CBA Daily Price Chart
click chart to enlarge
The next day the market gapped up and is presently sitting at around 150% of the weekly range I keep mentioning. We know from the Smarter Starter Pack Roadmap Chart that 150% is a place to watch as this can become a possible point A. We need to keep watching the gap from 8th to 9th February. As we know markets usually gap in the direction of the trend, but there is such a thing as an exhaust gap and if the market gaps back down again an island reversal will form. Have a go at measuring our timeframes from the April high - we are currently seeing a lovely Balance of Time.
Chart 3: CBA Daily Bar Chart
click chart to enlarge
However if it doesn’t gap back down what we might be seeing is a bigger trend forming. The market is now above the 50% levels from last year and the swing charts are all showing an up-trend. What we could be seeing is that the weekly range from late November is forming the first leg up of a bull market and the 150% repeat of it is a second leg up. Whilst we could see a pullback at this point, we will need to measure it against the run down from 24/12 to 6/1 to understand the strength of the market. If a pullback is shorter in time and price then we could likely see another leg up of similar size.
I will be watching to see if the market has a go at closing the gap before it heads up for the third leg. If it can’t quite close the gap then it is looking nice and strong and I will be looking for long trades. Chart 4 shows another scenario with a third leg (the same range as the second leg) running up from the bottom of the gap and lining up with the April top.
Chart 4: CBA Daily Bar Chart
click chart to enlarge
I’m becoming excited again at the prospect of a strongly trending market. However we can only trade what the market gives us. Let’s be ready with our Trading Plans to take what profits we can.
It’s the Journey
Lauren Jones
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