The XAO has had 3 weeks of a bull run….Does this mean a bottom as it broke some resistance levels spoken about in the last analysis that was done?

After the last 2 weeks and some significant resistance lines being broken, it was time to take a look at the weekly chart on a fresh. The XAO is still bearish with the long term down trend starting back in October 2007. Under this trend line is a 12 month Channel that has not yet been breached, and is also an intersection of a major trend line. This week’s trade ended right on this channel and resistance line, with lower volume.

The most likely outcome next week would be a pull back from these lines. Should this be the case, there are 3 elements to the analysis that will support a continuation of the bearish trend.

1.       The bearish channel will once more be respected

2.       A double top (bearish) will have been formed

3.       A fail to make a Higher Peak. Higher Peaks telling us the bulls are in control.

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