January 20, 2009

Bearish Down Day

By Planet Wealth

Last week’s weekly wrap on the XAO identified a possible Bearish Flag pattern. Let’s see what this week trading has done.
Below is a daily chart of the XAO. Highlighted is Thursdays trading bar and it has clearly broken through the bottom of the flag that has been acting as support. It was a Bearish Down Day with increased volume and could be considered the confirmation of the pattern. Over the next few months it’s likely the XAO will fall roughly another 940 points, that is the same distance from the top of the mast to the bottom, travelled again.

There is significant support at 3350 which could make another pullback to the bottom of the flag but overall it is likely to make it’s way down to 2500.
(click on image to enlarge)