Australian shares have fallen for the third day in a row. The technicals show that the index fell straight through the support level of 5420 and closed at its low today of 5352. This level was the support low seen in April to June. If the price falls through this price level then it is likely to signal further weakness and the index could then begin to fall all the way down to the low’s seen in mid October.
In contrast the US markets are continuing their bullish run with the S&P500 index making a new high overnight. It is clear that the Australian market is trading independently of the larger US market and is failing to follow its lead. This may signal that investors and traders are bearish about Australian market conditions and see better value in other markets. A pull back in the S&P500 index is likely to be supported at the resistance level of 2020 points.
I am neutral at present and not entering any long trades on the Australian market until I see evidence of the support level at 5350 holding and retracing above 5420.
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All ORDS Index
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S&P500 Index
Happy Trading,
Flavio
