- The ASX 200 has fallen significantly in Australia during the trading session on Wednesday, as it looks like the AU$7900 level will continue to be very difficult to overcome.
- At this point, we have to ask whether or not we are trying to form some type of “double top”, but I think it is a bit too early to start trading on that premise.
- After all, there are a lot of things going on in the world that could help Australian companies, especially exporters.
Underneath, we have the 50-Day EMA sitting right around the AU$7700 area and rising. All things being equal, this is a market that I think continues to see a lot of value hunters coming into this market, and of course you have to pay close attention to copper, iron, gold, and various other hard assets as it has a major and outsized influence on the Australian stock market as there are so many major miners in that region of the world.
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Don’t Forget About Asia
It’s also worth noting that Australian companies are extraordinarily sensitive to Asian economies, as most of the hard assets of come out of Oz end up in either China or other developing nations. While this could also be a negative, right now it certainly looks as if a lot of traders are betting on the idea that Asian will turn things around, and commodities will continue to go higher due to the fact that inflation is out of control.
This candlestick for the day is rather negative, so it is something that you need to pay close attention to due to the fact that typically large candlesticks like this or not done in a vacuum and there is generally going to be a little bit of a follow-through play after it. On the other hand, if we do turn around and take out the top of this candlestick, then it would almost certainly signify that we are about to break out to a fresh, new high, and go looking to at least the AU$8000 region, which of course has a lot of psychology attached to it.
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