In this week’s TSX Index Today Charts I’ll be going over the daily and weekly charts. It’s always imperative to have both a long term and short term outlook on the markets. The long term outlook or direction will influence what side of the trade you should be willing to take, Long term bullish you look for short term pullbacks and vice versa.
Looking at the long term TSX chart you can see that there was a long term down trend that started off the April 2011 high of 14,250. This down trend line was tested back in the spring of this year (April-March) only to fail and head further down in the summer months. Now it was in these summer months that our recent lows were put in thus starting what is now a visible up trend in the market. Our floor is now at the 11,250 point and the down trend line has been broken as we put in a new recent high at 12,500 in September.
We can now use our short term TSX Index Charts to see where our recent pullback will now be support.
Using the 11,300 recent low in July and the recent pullback to 11,800 we can now visualize the rising trend line that was apparent in the weekly chart above. What I have done is outline the recent trading range that we have jumped back into (in blue).Right now I would wait for a pull back to the support area of 12,200 level as that would offer the best risk/reward for new trades, if you do take a long position keep an eye on the recent eyes marked out in the box.
As always, use proper money management principles when trading and always asses your risk profile.