ASX and the Aussie Dollar

The Aussie Dollar broke support against the US Dollar at 77 cents, warning of a decline to test long-term support between 71.50 and 72.00.

Aussie Dollar

Iron ore continues to test new resistance at $62/tonne. Respect would warn of a test of primary support at $53. Declining Twiggs Trend Index indicates selling pressure.

Iron ore

The ASX 300 Metals & Mining index fared better, testing resistance at its three-year high of 3300. But the index is likely to follow iron ore lower. Breach of support at 3100 would warn of a decline to 2700.

ASX 300 Metals and Mining

The ASX 300 Banks index retreated from resistance at 8800. Respect warns of another test of primary support at 8000.

ASX 300 Banks

If banks and miners are both headed in the same direction, the index is sure to follow.

The ASX 200 continues to test resistance at 5900. Follow-through above 5920 would be a strong bull signal, indicating an advance to 6000. Reversal below 5880 would suggest retracement to test the new support level at 5800 (top of the narrow ‘line’ formed over the last four months). Twiggs Money Flow reversal below zero would be a bearish sign.

ASX 200

Despite the falling Dollar and iron ore, the present outlook continues to favor the bull side.

2 thoughts on “ASX and the Aussie Dollar

  1. Alistair says:

    Surely a falling $Aus is good for the miners and the banks have had some sound profit announcements. I would have thought if iron ore falls are not offset by a falling $ then we could a slide in miners. Also the recovering world economies must provide a posative outlook for commodities.

    • ColinTwiggs says:

      A 25% fall in the exchange rate would cushion miners from the fall in iron ore prices. The current fall of less than 5% does not offer much shelter.

      The banks have made some sound profit announcements but their outlook is still clouded by the property/household debt bubble and increased capital requirements. To me, fundamentals are bearish but a Banks Index breakout above 8800 would mean that technicals are bullish. I would still remain LT underweight because of the fundamentals.

      US and Japan are bullish but China has a greater impact on commodity prices.

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