Thursday, 6 October 2011

ASX 200 set to open higher

Daily candlestick chart shown below, including after hours trading, currently at 4001, up from Wednesday's ASX 200 close of 3926. The trend is down at this time frame, and also on the weekly and monthly charts.

Note that the market is testing the 18 day moving average. I have circled 9 instances since the April peak where the market turned lower from tests of that moving average. There are also 2 instances where the market went higher for several day after testing it. Of course, that doesn't mean there's an 80% chance that market will turn down now! The moving average test doesn't make any prediction at all, but it does provide us with a point to measure our risk if (if!) the market turns lower today.

Working against the above bearish potential are the bullish momentum divergences and cash market potential double bottom discussed last night.

AUD/USD rallies

Hourly candlestick chart. The AUD/USD has rallied from both the hourly (below) and daily (here) chart trend channel target lines. At this stage I need to see the market remain above the 40 hour moving average to be confident in a continued rally.