The XAO has recently broken a 12 month down trend line which will create a Higher Peak (HP). This is an indication it is gaining strength. But is this the bottom?

Though the charts are showing some strength there is not enough confirmation to call a bull market yet. Let’ look why. The overall down trend is still in place and the key Moving Average (MAV) is still holding it down. Until we see a Higher Trough, which we know tells us buyers in control, created above the MAV or overall down trend there is no confirmation.

There is still reason to believe this could continue the bear run. This week ended at a significant resistance line. As the down trend is still stronger than the recent run up we have had, probabilities say there will be rebound coming soon. Also when a market runs hard in a short amount of time, the way it has in recent weeks, there will be a pull back and pausing period. If there is a pull back support at 3300 could be enough to hold the XAO up with it’s recent strength. This could be a Higher Trough with an Inverted Head and Shoulders, giving more power to the chart enabling it to push through 3700 and continue a stair step up the MAV.

So overall this is still a bear market with the potential to turn bullish soon. Always wait for confirmation.

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