The ASX 200 index is testing its upper trend channel. Low volume is typical for a Monday — before US and European markets open for the week — but the low range indicates caution on the part of buyers. Reversal below 4100 would indicate a down-swing to the lower trend channel, while follow-through above 4200 would suggest a bear market rally to 4500. The primary trend remains down, however, and reversal below 4000 would warn of a decline to 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
At what point should you consider a trend has changed… in the example above would a breakout above 4300 prove sufficent?
I take it you are referring to the primary trend. In which case we need 3 decent blue candles on the weekly chart followed by a correction, of at least two red candles, that respects primary support at 3850.
So a minimun of 5 weeks would need to pass, essentially… with the key being that the 3850 (or above it?) gets re-tested… still fairly new to this but the re-testing seems to be a key… thx
The key is Dow Theory:
Primary and secondary movements are often easier to identify on the weekly chart. Hence 3 blue candles followed by a correction of at least 2 red candles that respect 3850 (forming a higher trough).