AUDUSD Remains at 3 Month Low – Market Update

ASX200

I feel like I am repeating myself when it comes to the ASX200 index.  In the last month or so the ASX 200 has been able to consolidate its break through the key 5800 level and in the last couple of weeks it has found reasonable support from this same level.  Throughout this week, the index has fallen away from around 5950 back to around 5850.

Interestingly the current price action over the last month is not too dissimilar to what we saw in January / February when the index met resistance at 5800 and found support at 5600.

The resistance at 6000 could become a self-fulfilling prophecy, like many things in technical analysis.   It will become a significant resistance level again because everyone is thinking about it and making decisions accordingly.  If you zoom out further on a chart of the ASX200 you will see how significant the 6000 level is too (look at early 2015) so as I look at it now, there probably isn’t too much further to go before it hits further resistance.  Plus 6000 is such a nice round number and much more obvious than 5800.

The all time highs / lows reading this week is 16 / 4.  The ’16’ is this highest I have seen in some time.  The cheapest stock in the top 500 that achieved new all time highs this week – Asia Pacific Data (ASX Code: AJD) and CSL was the highest price.  There were 4 stocks that have lowered themselves to all time lows with the highest price of those being Xenith IP Group (ASX Code: XIP).

Daily chart of S&P/ASX200 Index | Image from MetaStock

AUD/USD

The last month or so hasn’t been a great time for the Australian dollar.  It may be finally making a move.  As we know the Australian dollar has spent considerable time in the last 12 months trading between the two key levels of 0.75 and 0.77.  In the last couple of weeks the AUDUSD has dropped down below 0.75 and traded down to a three month low, after a strong down day earlier in the week.

As a technical analyst I am looking at the balance between demand and supply.  The buyers that have been so keen to devour AUDUSD any time it has gone near 0.75 over the last 12 months seem to have disappeared.   Now that the AUDUSD is trading at a 3 month low and a reasonable distance below the key 0.75 level, the 0.75 level may in fact reverse roles and start providing resistance for any potential movement higher.

As I type this it is trading around 0.7373.

Daily chart of AUDUSD | Image from MetaStock

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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.