There is a break in Aussie ST rally from late Dec 2011. Despite the RBA move in holding interest rate steady and China Feb PMI near 50, it has failed to close above 1.08. This suggests the long awaited pullback is here.
Could see AUD pullback to 1.04-1.05 from here and allow us to buy on pullback in other equity markets for an eventual May top.
However if the MT trendline from Oct is broken at 1.0290 (white line), then the feel good rally from Oct could be over.
Nothing is complete without looking at other markets:
DAX: has hit into key resistance (76.4% retracement of 2011 high to 2011 low) around 6978 yesterday and could pull back.
MXASJ: Is hitting into resistance near 538 (drawn from 2011 high) and also flirting around 61.8% retracement of 2011 high to 2011 low (528).
HSCEI: hit into key resistance of 11916 (drawn from 2011 high) and just above the 61.8% retracement of 2011 high to 2011 low (11588).
VIX: Recent low was around 18 compared to SPX recent high of 1367. Last year’s SPX high of 1370 coincided with VIX around 15. A mild bullish divergence here.
In nutshell, other markets also seem to be hitting a wall too. ST, not inclined to chase upside. MT picture for equity markets is e same as AUD, so long trendline from Oct last year holds, could use this pullback as a chance for an eventual May top.
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