Saturday, 28 April 2012

ASX 200 closes the week's after hours trade above resistance

The ASX 200 closed the week's after hours trade at 4399, well up from Friday's ASX close of 4362. Will the market follow through? The next potential resistance level is around 4450, at the June and July 2011 lows. The saying goes that there is no such thing as resistance in the bull market. Is the ASX 200 in a bull market? Not in my book. Why? Scroll down.

The long term log scale chart shows trend line resistance at around 4550.

AUD/USD rallies strongly in to week's end, measured target now mid 1.20s

On Friday the AUD/USD rallied strongly, clearing potential resistance from the earlier April highs. The first chart below shows that the AUD/USD spent the early months of 2012 breaking upwards from a symmetrical triangle, followed by a correction leading to multiple tests of the apex level, a not uncommon occurrence. Now that the apex level tests appear complete we can entertain the possibility of a new up trend developing, and calculate possible upside targets. One method of calculating a measured target for a break from a symmetrical triangle is to add the widest height of the triangle to the break out price. Approximately 1.04 break out price + 0.20 widest height gives a measured target of the mid 1.20s. This target may seem fanciful, and there are several resistance levels to be cleared before I'd seriously entertain it, but anything can happen.

It is worth a look at the weekly chart, to see which way the tide is moving. The black line is weekly closing price, the red line is the 40 week moving average, and the blue line is the 18 week moving average. Note that the 18 recently crossed bullishly above the 40, and that over the past 10 years such crosses have been a fair (though not infallible) indication that the market is embarking on a period of trending upwards.

S&P 500, NASDAQ 100, AAPL rally in to week's end

The S&P 500 rallied following a re-test of the support zone around the 2011 highs.

Zooming out we see that if (IF) the S&P 500 can rally through the nearby overhead trend line it will unlock larger bullish potential.

The NASDAQ 100 lead the rally for US stocks, following its break upwards from the recent down trend channel.

AAPL Apple's Monday night completion of a bearish throw-over was a (very!) temporary thing, as it rallied in to the end of the week, and now appears to have completed a successful re-test of the illustrated trend line. I believe the trend channel illustrated below is worth keeping an eye on.

EUR/USD thrashing around inside a triangle?

That's how I see it. Which way will it break? The wedge shape of the triangle favours a downside break in the near term, but given that the neckline or support line has now held three times since the descent from the labelled right shoulder, I am not sure of the downside potential.

Gold is testing short and long term trend lines

The daily chart shows Gold testing the upper line of the recent trend channel.

The weekly chart shows Gold testing the lower line of the trend channel that has contained prices since the late 2008 low. Any further rally would raise the odds that the recent foray below the trend line was a false break.

I case you missed it earlier in the week, I recommend that Gold followers read Peter Brandt's recent post titled Gold is within a week or two of declaring its next $260 move.

Silver shows false break below support shelf