An ominous chart pattern
Six-Month Daily Candlestick Chart
Reference the previous weekly chart of the TSX Index.
Chart Analysis: What is the downside risk for the TSX?
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Category Archives: TSX Index
TSX Index candlestick chart analysis
What is the downside risk for the TSX Index?
2-Year Candlestick Chart of the TSX Index
What are the key points from the above chart of the TSX?
- There is the possibility of a double top at 14,300.
- Major support on the weekly chart is 13,500. Reference the previous chart.
- I use a two-day time filter and a 2% penetration rule based on the closing prices.
- 13,500 will become resistance if the TSX closes below 13,500 using the above filters.
- 13,200 (near the March 7 retracement of 13,250) would then become major support.
- Using the above filters, a closing price of around 12,900 would confirm a double top.
- The downside risk would then be around 12,200.
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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.
© 2011 TradeOnline.ca
Technical analysis of the TSX Index
TSX Index in consolidation mode
3-Year Chart of the TSX Index
Reference last weeks analysis which was also a consolidation story for the TSX Index. This is in stark contrast to the S&P 500 Index and the Nasdaq Composite Index which are in an uptrend.
Also reference the most recent analysis of the TSX based on the daily candlestick chart which identified the possibility of a double top.
When trading online, you always deal in probabilities. And the probability of a downside correction is greater than an upside breakout. It has been a good run for the TSX Index.
Read the National Post article: Now’s the time to diversify away from Canada.
TSX candlestick chart analysis
Can the S&P/TSX index break resistance of 14,300?
TSX 3-Year Weekly Candlestick Chart
What are the key points to note on this chart of the TSX index?
- Major resistance on the candlestick chart is 14, 300.
- The index could not close above 14,300 on two attempts.
- Is this the start of a double top formation on the weekly chart?
- Support on the weekly chart for the TSX is 13,500.
- Is the index moving into a consolidation pattern?
- Notice how the bullish engulfing pattern signaled the start of the uptrend in March, 2009.
- Did you board the train in March, 2009? I was aboard with rest stops along the way.
- Candlestick chart formations indicated where you could disembark the train for rest stops.
- The bullish piercing pattern in July, 2010 indicated that the train was leaving the station again.
- Now, the train is at the station. When will it leave? And, in what direction?
Reference the previous chart analysis of the TSX index.
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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.
TSX candlestick chart analysis
Is this a Double Top Reversal for the S&P/TSX index?
S&P/TSX 3-Month Daily Candlestick Chart
The most important points from the above chart of the S&P/TSX index are:
- Major resistance is at 14,300 on the candlestick chart.
- There is the possibility of a Double Top Reversal bearish pattern.
- A close below major support of 13,200 would confirm the Double Top Reversal.
- Monitor support at 13,800 for the development of a consolidation pattern.
- There is a major support level of 13,500 on the weekly candlestick chart.
- Note the negative divergence with the MACD.
A neutral trading strategy is recommended — do not add to long positions — for Canadian stocks with alerts at the highlighted support levels.
Read this interesting article: Bull market quietly enters new phase.
Putting the March TSX correction in perspective
TSX decline to 13,200 represented a minimum retracement level of 34.4%
There are no firm rules when an index or stock retraces a prior move. The minimum retracement level would be 33% and the maximum would be 66%. If the correction passes the 66% level, there is a high probability the stock or index will retrace the prior move.
S&P/TSX 1-Year Weekly Chart
The most important points for the above TSX chart analysis are:
- The 50-day moving average is a good approximation of the trend line.
- The major trend ( longer than six months) is up.
- The intermediate trend ( three weeks to three months) is up.
- The near-term trend ( less than three weeks) is now up.
- The March correction was a 34.3% retracement of the July to March upswing.
- The March correction was -7.7%.
- The support level of 13,500 held on the pullback.
You can reference recent chart analysis of the S&P/TSX index to see where the index made an assault on the 13, 500 level. Then there was the break and the run to the March high.
This two-year annotated candlestick chart of the TSX makes one statement: it was a good run.
Maintain a neutral trading strategy at this juncture in the S&P/TSX index with alerts at the 14,200 and the 13,800 levels. A close above 14,200 would be a possible indicator to add to long positions as the index attempts a break through the recent high of 14,300. A close below 13,800 would be a possible indicator to liquidate some long positions as you monitor major support at 13,500.
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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.
Can the S&P/TSX index hold support at 13,500?
Weekly candlestick chart for the TSX index showing support at 13,500
The tsx index sold off last week as shown by the long dark candlestick and bounced off support at 13,500. The chart for this week shows the spinning top candlestick which is neutral and indicates uncertainty in the market. The positive point here is that the index is currently—as of the close on Wednesday—holding the support level.
TSX Two Year Weekly Candlestick Chart
The overall online trading strategy at this stage in the market is to raise the cash level in your portfolio and not add to your long positions. Some so-called value investors are adding to income producing stocks on the dips which include real estate investment trusts (REITs) and some of the financials. And the day traders will be trading the range of 13,500 and 14,000 in their online trading accounts: buy at support and sell near resistance.
Take a few minutes to customize BigCharts so you can view the above chart with the same settings on your computer. Take a look at the two-year annotated chart for the tsx index for a historical perspective of the market. This story from the National Post lists some of the fundamental data moving the markets.
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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.
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TSX at an advanced stage in this intermediate swing
Major support is now 13,500 for the TSX composite index.
1-Year Weekly Chart for the TSX Composite Index
From the July 5, 2010 low of 11,065; the index gained 29.5% to the March 7, 2011 high of 14,329. This has been a significant move over this eight month period. I usually look for reversal patterns to develop when the market has an intermediate move of 20%. The TSX is at an advanced stage in this intermediate swing and any technical evidence indicating a reversal must be taken seriously. In other words, the odds of a correction are much greater than the odds of an upward move.
Reference the two-year weekly annotated chart for the S&P/TSX composite index to get an overall perspective for the market.