ASX200
The ASX200 continues to trade in no man’s land between two key levels of 5000 and 5400. In the last two weeks, the resistance has lowered as sellers have entered the market lower than previously pushing the recent highs down to around 5300 from the previous resistance at 5400.
The 5000 level remains the most significant as many are keeping a close eye on it to see if the market can remain about this key level. The recent lower peaks around 5300 tend to indicate that more selling pressure on this level is not far away.
The 5000 level has done very well over the last few months to prop the index up and keep it from free falling down below into the 4000s. 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 as it has done for the last few months, 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.
In the stocks, BHP continues to disappoint as it moves to its lowest price in more than 10 years under $18. There is likely to be some ‘bargain hunting’ buying at these levels around $18 but I am not sure it will be enough to stop the rot and BHP falling further.
CSL, Macquarie Group and Scentre Group continue to defy the general market trend and hold onto or remain near highs, as CBA seems to be the best performing bank stock presently.
AUD/USD
Similar to the ASX200, the A$ also appears to be stuck in no man’s land between key levels.
Despite the recent strong surge in the Australian dollar, it has yet again run into resistance around 0.7370 which has seen it halt the rise and roll over to back below 0.73. The 0.7370 level played a similar role in early October and sent the A$ falling back to the key 0.70 level.
The 0.72 level has also provided some support to the A$ recently in the second half of November and and this may do it again in the near future.
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. After Governor Stevens told the market to “chill out” over rates, there has been cooling expectation that the RBA will cut rates again any time soon.
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 week, with the market currently sitting at around 90% chance that the Fed will do just that. Many would argue that this has been well and truly priced into the market already.
