Today may have been significant for the Australia 200 chart
The sell-off creates the possibility of a double top pattern. This has added significance because it’s happened exactly at an AB=CD level where the November/May upswing is exactly the same size as last year’s February/August move.
All this now makes the 5787 trough between the double tops an important chart level. A clear break of that support would complete the double top pattern and be a potentially bearish development.
Bank results and iron ore
Profit taking in the banks was the main driver of today’s sell-off. This followed ANZ‘s profit result yesterday which missed expectations.
That makes the other bank results pretty important for the index. If they also come in below expectations, the index could come under further pressure. On the other hand, if ANZ turns out to be the odd man out, the index may yet push up too new highs before long.
NAB will report on Thursdy;Macquarie Group on Friday and Westpac on Monday.
The iron ore price could also play a key role in all this. Disappointing bank results and significant declines in the iron ore price would be a bearish combination that could see a move towards the 5787 support. Between them the big 4 banks and BHP make up 33% of the 200 index.
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