All Ords shows signs of a rally but not the Dow . . . yet

The All Ords has finally made a reversal pattern. In Japanese Candlestick language it is called a 'Bullish Harami'. In our language it is called an 'inside bar' - that was yesterday (a lower high and higher low than the previous day, preferably both a lower open and close than the prevous day's open and close). The confirmation of the potentially bullish reversal came today when yesterday's high was surpasssed. The market should now rally but a fall below 4718 (Monday's low) would spell further trouble.

The 'Big Aussie' (BHP) also made a reversal pattern yesterday and confirmed it today. In 'Western' technical analysis it is called an island reversal (apparantly gets its name from the analogy of a boat reaching an island, unloading quickly and leaving immediately). BHP's reversal pattern is more persuasive but of course nothing is guaranteed. See chart below.

However the Dow has yet to make a reversal formation. That may come tonight. We don't always get a nice, neat reversal pattern at turning points so the US market could possibly rally without one but I would be a lot more confident of our market if the US also makes such a pattern.