Wednesday, 22 August 2012

ASX 200 below 4350 would hint that larger degree down trend is resuming

The ASX 200 yesterday broke upwards from both a bearish wedge and an up trend channel, illustrated below. A move below 4350 would hint that both those breaks were false, with near term bearish implications, and also long term bearish implications, given the market's proximity to the trend line drawn from the 2007 and 2011 highs. The following chart includes after hours trade and trade to 10:58am today.

AUD/USD testing lower line of up trend channel

S&P 500 makes a false break above March high, and completes a bearish wedge

Last night the S&P 500 made a brief false break above its late March high, while other stock indexes around the globe and indeed most US indexes have yet to test their equivalent levels. Such inter market divergences often accompany market turns. The following chart of S&P 500 all-sessions trade also shows that the market has broken lower from the smaller of the two illustrated bearish wedges, and has possibly completed a false break above the upper line of the larger bearish wedge.