The commodity relief rally continued yesterday and featured a spectacular 18% gain in iron ore. Even so, the momentum of risk on moves in other markets like equities is fading at this stage. Time will tell whether this is a pause or the start of a downward correction
Indices and shares
Australia 200. The 14 day RSI still looks a chance of rolling over from trend channel resistance (see box below the chart). Price has also arrived at a harmonic AB=CD level and is pausing there this morning. If it now starts to make lower highs and lower lows, a correction is on the cards. If not, the next levels include the 78.6% Fibonacci retracement and 200 day moving average around 5215/5230 and the 127% harmonic projection around 5270.
Australia 200 CFD Daily
Click to enlarge
Westpac. Buying in the big 4 banks has been a major contributor to the recent Australia 200 rally. Westpac up 12% on its recent low but has now reached an interesting chart level. This mornings’ peak has so far been neatly at the resistance of an old support line; the 78.6% Fibonacci retracement and the harmonic 168% ABCD level. As with Australia 200, rejection of this level could signal the beginning of a correction.
WBC. ASX Daily
Germany 30. Continues to hover at its 50 day moving average and is struggling to get clear of this level. If it can get clear, the next resistance test may be the 50% retracement of the whole decline from 11440. This is around 10,067. Near term support is provided by the recent high at 9570.
US SPX 200. An inconclusive inside day sees US SPX 500 continue to falter at the resistance of its November/December lows around 2000. If it can get clear of these, the next potential level is 78.6% Fibonacci retracement around 2030/2042. Last week’s high at 1971 provides minor support.
Aussie Dollar: Continues to make higher highs and higher lows but has reached a cluster of Fibonacci levels made up of 127% harmonic ABCD projections and the 50% retracement. If it clears this the next major test is the March 2015 lows around .756. However, the RSI has moved into the overbought zone and rejection of these Fib levels could see a correction. Short term support on the hourly chart is the recent low of .739 and a break of this could signal a correction is getting underway
AUDUSD CFD Daily
EURUSD: is a key market this week with the ECB meeting on 10 March. Friday peaked neatly at the 38.2% Fibonacci retracement and 200 day moving average. This is now short term resistance. Short term support on the hourly chart is around the 38.2% retracement at 1.096
Crude oil Brent cash: Another strong green candle saw Brent move straight through potential resistance. Upward momentum is strong so waiting on signs of stalling before picking turning points may be prudent. Right now though, Brent is at a 127% level around $40.60. The next level above that could be the 61.8% retracement at $41.75. Past resistance at $35.80 is now support.
Copper is back to its 200 day moving average for the first time since May last year. There is a potential zone of resistance around here and up to the 38.2% Fibonacci retracement level around $2.33. The slow stochastic is still trending up below the overbought zone indicating the possibility of a bit more upside yet. Support is down at previous minor highs around $2.14/2.16
Copper cash CFD weekly