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.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.