The Aussie Dollar broke long-term support at 70 US cents (as shown on the quarterly chart below), closing below 69 cents. Target for the decline is 60 cents.
The ASX 200, reflecting the counter-balance between its two largest sectors, recovered to test resistance at 6350. The Trend Index trough above zero signals buying pressure.
Financials (32% of the ASX 200) penetrated its rising trendline to warn of a correction. Follow-through below 5800 would indicate a test of primary support at 5300.
Materials (18% of the index), on the other hand, rallied strongly after respecting support at 12500. Follow-through above 13500 would signal another advance.
I would be cautious of any breakout on the ASX 200 and would wait for retracement (respecting the new support level) to confirm the advance.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.