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Finally, Westpac has moved outside the range I mentioned we should watch in the January Safety in the Market Newsletter (Advanced Entries on Westpac). Looking at the weekly chart in Chart 1 we can see that it has moved above 50% of the range down from April to July 2010, indicating some strength in the market. In the process it has closed the gap on the daily chart that we saw acting as resistance for most of the past year. Chart 1: WBC Weekly bar chart with 50% of ranges
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I have shown this gap lining up with the 50% level in Chart 2, however we can also see some further resistance ahead in the form of more gaps in the daily bar chart. If these gaps form clusters with price levels from our resistance cards or with milestones of our trades then we would expect some resistance and perhaps a pull-back before the market pushes through these levels. For example take a look at the milestones for the double bottom clustering with 66% of the range in the same chart. These are just some of the Price Analysis techniques we teach at the Safety in the Market Interactive Trading Workshop (ITW). Chart 2: WBC Daily Bar Chart Showing Gaps and Price Cluster
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Taking a look now at the swing charts for Westpac shown in Chart 3 we see that the trends are up (higher tops and higher bottoms) but note also that each is at the top of a swing that is approximately a repeat of the previous swing. With expanding ranges, the current upswing might continue, but I would suggest that some form of pullback is in order before we can look for an opportunity to take long trades. Chart 3: Swing Charts for WBC
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A great strong setup would be if the weekly chart pulled back and sat above the 50% level. Then a weekly long ABC setup would be looking attractive. We also might see a 1-day ABC setup appear above this 50% level in the coming days. This gives us some ideas of what might ensue, but at the moment we need to keep stalking and remember we can only trade what the market gives us.
It’s the journey
Lauren Jones
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