Last week in this continuing series of identifying chart patterns I shared with you Flag and Pennant patterns. This week I've noticed the completion of a Symmetrical Triangle Pattern on our All Ordinaries Index, so feel its appropriate to cover that.

The All Ordinaries Index as of today...

"Click here to see the chart"

What I'd like you to note about this chart is that yesterday represented the completion of the Symmetrical Triangle Pattern that the All Ords has been establishing for the past 5 months. The market broke out of the triangle in an upward direction. That told us that there was still plenty of buying action in this market.

We observe that the All Ords is now again at it's all time high. So the next few days are extremely important to us traders. If the All Ords breaks above the current price range, it will mean that it's starting an entirely new trading pattern. Note the Resistance level drawn on the chart. That would be an extremely good thing because it would mean that there is plenty more positive life in this current market and many more buying opportunities would present itself.

The market might also pause for a little while at this price level as buyers assess whether the market is priced too high. Remember the last time we were at this price level was back in May - after which the price fell dramatically. This assessment could take a few days or so.

How to trade this situation:

Now you might be thinking, well that's all very interesting, but what am I supposed to do?

1. This is a time for observation.
   
   
2. The market is at a critical deciding point. So this is one of those important times when it is best to sit back and simply observe!
   
   
3. Watch to see if that significant Resistance level that was set in May is broken.
   
   
4. Our approach is to not pre-empt what the market will do. Rather we sit back, observe, monitor and simply wait and most importantly - take caution in our trading decisions until we see an outcome to this situation.
   
   
5. In other words let the market itself tell you what to do.

More on Chart Patterns next week.

Until then…

Jules Dawson

Jule Corporation Pty Ltd
PO Box 1241 Mullumbimby NSW 2482
Telephone: 1300 557 881
Email: info@julecorp.com
Web: www.julecorp.com