IT’S ALL ABOUT THE DOLLAR
The Australian Dollar is in a sideways consolidation. The key support and resistance lines are shown on the chart below. The sideways consolidation has broken out of the rising wedge; but until horizontal support is broken, we must presume the trend remains up. So long as the Ozzie remains in an uptrend, this will support our stock market.
Corrections in the Australian stock market are marked by slowing momentum in the Ozzie Dollar. The market has returned to a bullish stance whenever the Ozzie has regained momentum. At the current time, the Ozzie has still not regained its upward momentum. Momentum is determined by the distance of the Ozzie Dollar from the 50-Day SMA. The following momentum chart clearly shows the relationship between momentum on the Ozzie and the Australian Stock market. The three major corrections which have occurred this year are clearly marked by loss of momentum in the Ozzie Dollar.
Until momentum returns to the upside, the Australian market will remain in a sideways-to-down correction.
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