The ASX 200 continues to test the resistance zone that I have repeatedly illustrated for several weeks now. The first chart includes after hours trade, which ended the week at 4366.5, unchanged from Friday's ASX close. The upwards sloping trend line provides much hope for the bulls, though they would do well to keep their eyes on increasingly weak overseas markets.
The second chart shows ASX trade only (ie. doesn't include after hours or futures trade). Friday's trade stayed within Thursday's range. Thursday's potential double top with the early April high remains on the table. The October high remains unbeaten.
The third chart shows that the past 8 months of consolidation has occurred within the context of a larger degree down trend.
Saturday, 21 April 2012
It is worth keeping an eye on these two indexes, as in recent months the NASDAQ 100 lead the way for US stocks, and the German DAX is the bellwether index for Europe. They are both trending down.
The AUD/USD had a quiet week, trading inside the range of the previous week. In fact from April 13 onwards the market has largely traded within the confines of the April 12 daily high and low. Will a break of the tight trading range be the beginning of a new trend?
The EUR/USD's strength late in the week carried it away from the potential Head and Shoulders neckline. Is a Head and Shoulders top still forming, or will the potential neckline prove to be trend line support? If trend line support, will it be a launching pad for a rally, or for a period of consolidation? I don't like to trade a market which I have so many unanswered questions about. The picture will clear in time. An immediate decline early next week would strengthen the H & S potential. I have re-drawn the down trend channel slightly differently from previous posts.