Saturday, 2 June 2012

ASX 200 trends down toward test of 4000, break would target low 3000s, then low 2000s

The ASX 200 closed ASX trading on Friday afternoon at 4064, and declined in after hours trading to close on Saturday morning at 4009.

The weekly candlestick chart shows why the 4000 level is key. It coincides with the trend line drawn from the 2009 low. Given the precarious position of highly correlated overseas markets (eg. the US S&P 500 and German DAX), do not under estimate the potential for a break of the 4000 level.

Zooming out to the longer term monthly candlestick chart shows that the ASX 200 is trending lower inside a down trend channel. A decisive break of the 4000 level would indicate a continuation of the down trend, and target the mid-channel line (low 3000s). A break below the mid-channel line would indicate a target of the bottom trend channel line (low 2000s).

S&P 500 sinks further below key resistance, shows bearish momentum divergence

Monthly candlestick chart. While the market trades below the nearby overhead trend line, the potential for a decline to the lower trend line (or below) should not be under estimated.

DAX closes below 40 week moving average

The German DAX broke and closed below the 40 week moving average. It did likewise in early 2008 and mid 2011, both times ahead of rapid declines. If the current decline has legs, the 40 week moving average should cap any rally.

AUD/USD tests support

Weekly candlestick chart shows the big picture.

For support to hold, the AUD/USD needs to rally back above the overhead trend lines. Until/unless that happens, the trend is down.

EUR/USD tests support at trend line drawn from 2001 and 2002 lows

Weekly candlestick chart shows the big picture.

Daily candlestick chart shows the trend lines that the EUR/USD must break to the upside to indicate that support will hold. Point being, until those trend lines are beaten, the trend is down, and lower prices are likely. Potential resistance also lies overhead at the 2012 low.

USD/JPY continues lower

The wedge pattern and multiple bullish divergences on the long term monthly candlestick chart indicate an impending rally. The wedge suggests a target of above 120.

That said, this market continues to trend down at lower degrees of trend. Daily chart is shown below. Perhaps the lower trend line will provide support. The USD/JPY needs to get over 80 and break upwards from the recent trend channel to have any chance of fulfilling the long term bullish set-up.

Gold's bull market looks to be resuming

This post examines charts of Gold priced in three different currencies; the US dollar, the Aussie dollar, and the Swiss franc. Gold's bull market looks to be resuming against each of those three currencies.

The following weekly candlestick chart shows the Gold (USD) bull market that began in 1999. The trend line drawn from the 2008 and 2009 highs has supported the market in recent months, and runs parallel to two significant trend lines from earlier in the bull market. So long as the recent lows hold, Gold's bull market against the USD  has resumed.

Zooming in to the daily candlestick chart for the past year we see that the recent down trend has finished, though it is too early to draw a new up trend line at this timeframe.

Next let's look at Gold priced in Aussie dollars. A proxy for this is the GOLD ETF traded on the ASX (GOLD.AX). The monthly chart shows that the market has recently tested the trend line drawn from the 2005 lows.

Zooming in to the daily chart of GOLD.AX shows it recently tested the down trend line drawn from the 2011 highs. Following Friday night's European and US trade in Gold and AUD/USD, this market will open higher on Monday morning, gapping through the trend line, indicating resumption of the larger degree bull market illustrated on the previous chart.

The final chart shows Gold priced in Swiss francs (CHF), courtesy of Peter Brandt. It also looks to be heading higher.

Silver through the telescope

The following weekly candlestick chart shows the Silver bull market that began in 1991. The trend line drawn from the early-mid 90s highs has acted as support over the past 6 months. So long as that support trend line holds, Silver's bull market likely has further to run.

Canberra and Queanbeyan housing stock on market to 2 June 2012

For Sales have been flat since last update a month ago, while For Rents continue to rise. Quick plug: Blogger Capital Appreciation has the best in depth analysis of Canberra Real Estate over at