Wednesday, August 18, 2010

SOFIX breaks the Wedge pattern to the Upside

Following my last chart view of the major Bulgarian stock index - SOFIX from May 16, 2010:

I present an update on the market action.

Back then I wrote: "Technically the index is moving inside the Trend Channel which is the first Support at 398-399 is broken decisively with a close below will run into the Critical Support area at 360-344 where the Trendline support confluence is located. ... The important spot below 399 is the August 2009 Gap (360-380) which is begging to be filled by any textbook example. So the focus is if the confluence of the 344 support and the Trend channel bottom will provide the sufficient cushion for a reversal."

Indeed 360 level got tested 3 times and proved a hard Support from which stocks bounced for a swift rise into the 390-400 Resistance Area. The break to the Upside is shown as a breakout from a Falling Wedge pattern which is typically a strong Bullish sign. I expect however in the mid term some consolidation in the 380-400 area before the uptrend continues. Only a fall and close below 380 would turn on the bearish sentiment again.

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