Saturday, 29 October 2011

ASX 200 set to open higher on Monday

After hours trading ended the week at 4367, up from Friday's ASX close of 4353.

The daily chart illustrates the potential that the market has completed a throw over at the top of a corrective channel / bearish flag. If the market beats Friday's high it will negate the immediate bearish potential and open the door for further gains in the coming period.

The weekly chart shows that the market is in a solid down trend, well below both the declining 40 week moving average, and the down trend line drawn from the 2007 high. This down trend raises the odds for a bearish resolution of the daily chart pattern, and new lows in coming months. The daily chart provides a nearby point to measure the risk for the immediate bearish potential.

S&P 500 testing trend line and neckline

The S&P 500 is testing a trend line drawn parallel to the trend channel that so neatly captured the 2007-2009 decline, shown here on the weekly candlestick chart.

The market is also testing the neckline of the 2011 Head and Shoulders top, shown on the daily chart.

EUR/USD testing trend lines

The EUR/USD is testing trend lines on both the weekly and daily charts.



AUD/USD long term monthly chart

The trend is clearly up at this time frame, raising the odds for new highs in coming months. However with the the S&P 500 and EUR/USD both at key inflection points and both strong influences on the Aussie, it could go either way.

Gold daily chart

Gold is rallying within a trend channel. It is not yet clear to me whether the market action is corrective of the preceding decline (bearish) or the beginning of new larger degree rally (bullish).

Silver long term weekly chart

Silver is testing the topmost trend channel line. Until this week's rally it appeared that a throw over was complete and that the next trend would be down. Now I think the market is in no man's land, with no clear trend.