Monday, August 25, 2014

SPASX200 Australia Weekly Chart Rising Wedge Negative Divergence

Australia indexes are at six-year highs and the ASX 200 finishes lower today breaking a seven-day winning streak. The chart above is not yet updated for today's price action but should be in the hours ahead. The red lines show the rising wedge and negative divergence in play. Collapses from rising wedges can be quite dramatic. In recent days and weeks, the steel, iron ore and coal industries receive a bump higher. The PBOC hints at more stimulus on the way so China economic activity may pick up requiring raw materials from Australia. However, this may simply represent the latest hot central banker money chasing the latest shiny objects.

The standard deviation bands are squeezing in tight for a big move and the bulls appear to be running higher, however, price has pierced the upper band and the ASX 200 finishes lower today. If the Aussie bears want to force a failure out of the rising wedge they need to make a move this week and take advantage of the tight bands to help generate downside. The red lines are negatively diverged but in the VST the RSI and MACD line are trying to create upside so price may hold on at these levels for a few more days or weeks. Price is spanked down from the red trend line today so it will be important to see if price can poke above, or not. If so, then the upper trend line will be in play next.

The ADX at 10 indicates that the trend higher is extremely weak. If the strength was real the ADX should be 25, 30, 35 and higher. It will be interesting to note the direction of the squeeze over the next couple weeks. The US Labor Day holiday is next Monday and markets are closed. US markets are typically bullish moving into a three-day holiday weekend so the global stock market bulls may win out this week into September but the chart above overall, for Australia, hints that trouble will appear in the weeks ahead. If long the ASX 200, stay very nimble and identify firm stops if the ASX 200 begins falling. Better yet, scale-out of the long side as the days and weeks go forward while scaling into the short side. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.