The ASX 200 found short-term support, with a long tail at 5500, but there are no significant volumes to indicate a concentration of buyers. Expect further weakness unless the Dow and S&P 500 reverse direction overnight. The monthly chart below portrays a long-term view, from 2007 to the present. Three factors stand out:
- medium-term support at 5400;
- primary support at 5000/5050; and
- bearish divergence on 13-week Twiggs Money Flow.
Respect of support at 5400 and the secondary trendline would signal continuation of the current strong primary trend. Breach would signal a test of primary support. Failure of primary support remains unlikely. But bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. The indicator often dips below zero in a weak trend, but reversal below zero after a large divergence would be a strong bear signal. One cannot, however, anticipate this. TMO could just as easily recover above the descending trendline, signaling that buyers are back in control.
* Target calculation: 5550 + ( 5550 – 5350 ) = 5750
I really enjoy reading your technical analysis postings. Very informative and they’re really easy to follow. Thank you for taking the time to share your thoughts.
Thank you for this analysis. As a new options trader I have been feeling a little lost not knowing which way the AUS market is headed. Thanks for the insight into what to look for! I’ll be checking the Dow and S&P tommorow morning.