Technicals | May 21 2018
By Craig Parker, asset manager, Moat Capital
So where to now for our market? A couple of weeks ago I mentioned we have moved back into the long-term uptrend on all the charts daily, weekly and monthly and that we needed a breather from the recent significant run up. Since then we have had a little further run to the upside, formed resistance at 6150 and we are now back to where we were a couple of weeks ago. I suspect that the run up in materials coinciding with the slide in our dollar which has fueled the overall upward momentum is running out of steam. Our dollar will likely move back towards the 200-day moving average which will place some pressure on the materials sector and our overall market.
I’d like to think that the Financials sector could pick up the slack, but it is currently in a clear downtrend although, on the bright side it is hanging around some old resistance levels which could provide support and there is clear bullish RSI divergence on the weekly chart. See what happens here considering the sector has taken a pummeling from the Royal Commission. Now the market will be guessing what policies might come out of the findings or at the very least how severe the policies will affect bank profits and growth going forward. Some other positive news from a technical point of view is China and the Shanghai composite illustrating clear bullish RSI divergence. Perhaps it’s moving back into its uptrend as well. Enjoy your week!
ASX200 daily
ASX200 weekly
ASX200 financials ex-REITs weekly
Shanghai Composite weekly
AUDUSD daily
Authorised Representative Life Plan FP AFSL 449658
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