The market was flat today - a bit of excitement was generated by the Reserve Bank and the Three Amigos, and after a sharp kneejerk reaction downwards, the market said, hey - that don't mean truckloads - and came back to par.So - we're left with the charts. Let's deal with the XAO charts first.
If we look at the intra-day chart, the gentle upsloping wedge I mentioned yesterday played out perfectly today. The market broke below the supporting line of the wedge, hit the 65-period moving average and bounced back up to hit that support line from below. It is now acting as resistance. The most likely direction from here is down.
Looking at the daily Chart, we're at the top of the dividing range. 4600.
The chart is at a clear resistance level in price, and a major Moving Average (150-Day SMA).
Does the market go up - and to green pastures or, does it fall back into the abyss?
The intra-day chart is suggesting a down move.
Now - have a look at the A/D Line and the RSI for the A/D Line.
The A/D Line has powered up to new highs - even above the April high.
The RSI is showing a very clear negative divergence suggesting the next move is down.
My thinking - the market is going down. Just the humble opinion of an old addled chartist. Do your own research, and don't believe a thing I say.
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