- Most indices around the world have been fairly positive, but it’s hard not to notice that the ASX 200 may have gotten a little bit of a stretch, but I also believe that the ASX 200 might end up being a nice buying opportunity on some type of pullback.
- The market is likely to continue to see a lot of interest right around the AU$7900 level, and therefore if we do pull back toward that area to be interesting to see if we bounce.
Technical Analysis
The ASX 200 had recently broken out of the major ascending triangle which had a lot of resistance at the AU$7900 level, any pullback at this point in time should offer enough interest by the bullish traders out there to jump in and play the “breakout, pullback, and continuation trade.” Keep in mind that a lot of commodities of course have been relatively strong, and that has an outsized effect on Australian stocks in general.
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If we do continue to break out to the upside, it’s also worth noting that we have clear the AU$8000 level, and that of course is a large, round, psychologically significant figure, and an area that a lot of people will be paying close attention to. Nonetheless, this is a market that is obviously very bullish, and I don’t have any interest in trying to get too cute at this point and try to fight the trend. The trend is very obviously strong, and I think that is the most important thing you should pay attention to.
Asia
Pay close attention to Asia as well, because the Federation does, the better Australia will do. Obviously, Australia delivers a lot of commodities to mainland China, Indonesia, Malaysia, etc. But we also have to keep in mind that Australia has a major banking center for the region as well, and therefore it’s likely that any type of investment in Asia eventually finds some type of correlation to Australia and its large financials. At this point, I think this continues to be a “buy on the dips” set up.
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