Autochartist Weekly Analysis
Sundance Limited (SDL.AX)
by James A. Hyerczyk
Autochartist has identified an ABCD Fibonacci pattern on the Sundance Resources Limited (SDL.AX) 1440-minute chart. Now that Point C has been labeled at .43, Autochartist is projecting the start of a near-term break into Point D, or the downside target at .30. A move to this potential support level will mean the downtrend was reaffirmed when Point B, or .33 was penetrated, setting up the market for a near-term retracement into a series of Fibonacci price levels ranging from .35 to .51.
The ABCD Fibonacci pattern is known as the "lightning bolt" pattern. It is also often referred to as the "backbone" of all Fibonacci patterns. The key to this pattern is its price and time symmetry. For example, knowing the distance and duration of the move from Point A, or .46 to Point B, or .33 allows Autochartist to forecast the next possible break into the target price at Point D.
The failure to rally to a new high shortly before the formation of Point A gave this equity CFD a bearish bias. The swing from Point A to Point B took out a swing bottom, turning the main trend to down. The retracement to Point C failed to attract fresh buying and the rally stalled. This action set up the forecast for the break into the target price, or Point D.
The break from .46 to .33 was .13. Subtracting this from .43 gives us the target price of .30. Trend traders may want to short the market looking for the break into the target price. This trade will be valid as long as Point C holds as resistance. Aggressive counter-trend traders may want to wait for the .30 to be tested and trade the long side for a rally into the series of Fibonacci retracement levels. This trading opportunity will be valid as long as .30 holds as support. Remember to use stop loss protection whether trading with the trend or against it.
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