ASX200 Keeps an Eye on 5000, as AUD/USD Enjoys 0.72

ASX200

The ASX200 has done well of late to distance itself and move away from the key 5000 level however it remains well within reach. This level continues to loom and is poised to play a role again should the index retreat further.

Should the index continues its rally higher then it is likely to run into more potential congestion around the key 5500 level which is looming above like a dark cloud.

The perception of the significance of the 5000 level is often understated. Whilst the market’s value is only slightly different between the index at 4950 and 5050, the perception is that it is in much more bearish territory should it remain below 5000. You could argue that on this basis, way too much attention is placed on what is simply a number which means very little else.

Having said that, the ASX200 index continues to rely on whatever support it can get from that level and is presently hanging on trying to avoid another collapse similar to what it experience in August.

The index volatility also remains high even though this has eased a little to back under 1.7%. This indicates that the irrational behaviour remains and is likely to continue to see some investors remain out of the market until the market calms a little.

XJO_20151013

BHP has been the surprise mover in the last couple of weeks surging strongly from its seven year low. It does remain firmly entrenched in a strong long term down trend however. Rio Tinto has experienced a similar recent rally.

Continuing to buck the general market trend, Macquarie Group is doing well to stay within reach of $80 as it remains within reach of its 2015 high, as is Scentre Group. Westfield is making a push to break through the resistance level at $10 and potentially threaten its 2015 highs. CSL continues to hold up well and remain quite resilient to the general market trend as it remains well supported by a range between $85 and $90, and more recently the $90 level.

The most interesting story from the top 20 stocks presently is probably Telstra. Despite the market’s resilience over the last couple of weeks, Telstra has failed to gain any ground and is threatening to move lower to a new low for 2015.

In the industry sectors, it has been the Materials sector making the biggest move and a few more industries turning green in the last 3 months. See more here

AUD/USD

Just like the ASX200 index, the AUD/USD has done a great job of moving higher away from a significant level in the last few weeks. It has however been sold off strongly in the last couple of days and is now enjoying solid support from the key 0.72 level.

If the AUD/USD is going to continue to rally higher then the 0.72 level is likely to play a key role in providing support and helping the AUD/USD back to around 0.7450.

The long position ratio amongst OANDA clients has shifted of late to even right up at 50 / 50 indicating a clear cut division of expectation for the A$.

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.