ASX200 and AUD/USD Remain Resilient

ASX200

In every December since 2009, there has been a strong surge higher, so there must be something special about the year end. Based on that I wouldn’t be at all surprised to see something similar again this year however I do see some limited upside.

The ASX200 has been under immense pressure during the last few weeks falling from resistance at 5400 down to the significant level of 5000. This latter level has done well over the last few months to prop the index up and keep it from free falling down below 5000, and was called upon only a couple of weeks ago.

The recent peak around 5300 following the previous peak around 5400 indicates increasing selling pressure on the index and its likelihood to return back towards 5000. As always this level will be closely monitored to see if the index can remain above the 5000 level or slip down into new territory below there to levels not seen consistently since 2013.

Should the support at 5000 continue to hold, it doesn’t appear as if the index has far to run upwards as it is likely to run into more potential congestion around an area that has become significant of late, at 5400. This level has provided strong support throughout June and July and more recently provided resistance and pushed the index lower a few weeks ago.

Accordingly the support at 5000 and the recent resistance at 5400 has left the ASX200 index sitting in some no-man’s land between two key levels, where it has been since September.

In the industry sectors, Health Care has eased a little.

AUD/USD

Yet again the 70 US cents level has held up well for the Australian dollar over the last couple of weeks providing strong support and pushing the Australian dollar higher again. There also seems to be a cooling expectation that the RBA will cut rates again next Tuesday.

The RBA has made it clear they are seeing some positive signs, especially with recent employment numbers. In their last meeting, the board members observed that the Australian economy continued to grow in the September quarter as economic activity continued to shift away from mining investment to other sectors of the economy.

This may provide some support that the A$ so desperately needs.

On the other side, the Australian dollar may come under renewed pressure as the Fed seemingly now has a green light to raise US rates as early as next month, although many would argue that this has been well and truly priced into the market already.

The AUD/USD remains the 3rd most actively traded currency pair amongst OANDA clients globally and the long position ratio amongst those clients sits right at at 50% therefore they also seem equally split as to ‘where next?’ for the A$.

AUDUSD

Stuart McPhee
Stuart McPhee

Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.