According to Rhea, whose work is recognised as the foundation of the Dow Theory by many: “Dow Theory define the trend in terms of peaks and troughs made by swings in the average. Therefore a Bull Trend is a succession of higher peaks and troughs, while a bear trend is a succession of lower troughs and peaks”.
What do we see with XJO weekly ( ASX 200) chart as of this writing ? A higher peak made after a lower trough. Like an outside bar.
This is where the Dow Theory may be disputed by some it’s followers. Some followers of the theory, accepts this phenomenon as a valid trend change, whereas Rhea did not. TA doesn’t meant to be easy I guess with lots of subjectivity.
Let’s focus on the price action of the current week. A confirmed HIGHER PEAK is a good evidence for me to say that the medium term Dow Theory trend is now turned UP with XJO. A bullish development which can not be ignored.
In terms of where the price action is on the other hand, it is testing a prior price resistance level of 5500.What it does from here on is up to the Mr Market off course. But looking at the today’s bar on the daily chart ( not shown) indecision is evident, meaning buyers are not keen nor committed even though they still maintain control.
Weekly XJO chart as at 24/11/2016.
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