Thursday, 22 March 2012

S&P 500 and DAX look to have topped, ASX 200 fall cushioned by smashed AUD/USD

On Tuesday I suggested that a move by the S&P 500 / SPX below Monday's low would be a sign that the wedge pattern had completed and that the S&P would decline. Well an hour or so in to tonight's European session, here we are. A move below the lower trend line would confirm a top of some importance, though keep in mind that the trend on the weekly and month charts is up.

Also on Tuesday I suggested that the move by the German DAX below the trend line drawn from its recent highs was an indication of weakness. That weakness has extended.

In after hours trade the ASX 200 / SPI is only slightly below par with Tuesday night's chart, likely being cushioned somewhat by the sharply declining AUD/USD. Don't forget that the megaphone is a bearish pattern, which in combination with the S&P's wedge pattern, suggests that the present global stock market decline has further to run.

AUD/USD headed to test 94c?

If the Elliott wave count I presented two nights ago is correct, today's break below 1.0380 suggests the AUD/USD should now trend downwards to test 0.94. Regardless of Elliott Wave considerations, the near term trend now looks to be down. A sustained move below 1.0332 should remove any doubt about that.