Wednesday, 15 May 2013

ASX 200 still testing parallel trend line resistance

The ASX 200 continues to test parallel trend line resistance. The parallel trend lines are best shown on the weekly chart. Repeating what I wrote last week "in 2010, 2011, and 2012 the market made marginal new highs in April or May, then declined powerfully, anywhere from 10% to 25%. How about 2013? We've got a marginal new high in May. The latest in the series of parallel trend lines may also be significant. Will history repeat and give us a decline from nearby current levels?"

Daily chart zooms in a little. The lack of advance in recent days is remarkable, given the S&P's 500 strength and the AUD/USD's weakness. Often / mostly the ASX 200's performace is a direct function of those two factors. If (if) trend line resistance is broken, the ASX 200 might make up for lost time.

S&P 500 launches upwards out of 6 month old trend channel

The S&P 500 futures have launched upwards out of a 6 month old trend channel. While the market stays above the upper trend line, we must respect its potential to accelerate (!) perhaps launching a blow off top. It intrigues me that everything seems to be weakening against the US dollar except for stocks, and I'll be surprised if such a glaring intermarket divergence lasts indefinitely, but you've gotta trade what is happening rather than hypotheticals (coulds or shoulds). If you can't get over the conflict between what you see and what you think, find another market to trade.

Nikkei nearing possible resistance at 22 year old trend line

... and hitting reistance at the slightly younger lower parallel trend line.

AUD/USD testing lower line of 20 month old triangle

An upwards break would target 1.20 or so, while a downside break would target low 0.80s.

EUR/USD testing trend line drawn from 2012 and 2013 lows, building Head and Shoulders top

GBP/USD breaks lower from up trend channel

Daily chart shows trend channel break.

Weekly chart break from triangle with measured target below 1.30 suggests decline has further to run.

AUD/JPY testing trend channel support, will it rally or break?