- The ASX200 rallied initially during the trading session on Tuesday but gave back some of the gains as we've seen Europeans start selling off late in their day.
- This has had a little bit of a knock on effect in electronic trading in both the United States and Australia, but this tends to be what they do at the end of the day.
- And therefore, it'll be interesting to see how this sticks.
When you look at the ASX200 overall, you can see clearly that it is an index that's been trying to rally for some time, with the 50-day EMA just below offering a certain amount of support. Underneath there, we have the $7,675 Australian dollars level offering support as well.
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The biggest thing that I pay the most attention to on this chart is the $7,900 Australian dollars level above, because it has been like a brick wall. However, we are starting to compress into a triangle, and that suggests to me that we are about to make a move in one direction or the other. Keep in mind that the ASX is heavily weighted in two different sectors, the financials, which is true with most countries, and then of course the materials sector, because as you probably know, Australia is a major exporter of iron, aluminum, copper, gold, et cetera.
Buying on Dips? Probably.
This is a market that I think offers a lot of buy on the dip attitude, but don't necessarily jump in with a huge position. If we were to break down below the $7,675 level as possible that we could drop down to the 200 day EMA, but right now I think we are more likely than not going to continue to see people jumping in and taking advantage of value as it occurs in Australia.
I think that’s probably true with most indices around the world, but the Australian index is always a bit interesting to me due to the fact that it is a way to play commodities without having to pick a particular one, nor do I have to pick a particular company.
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