Market Update: October 15 – Antipode Breakdowns

ALL ORDINARIES (AUSTRALIA) WEEKLY

Australia’s All Ordinaries Index (local currency terms) is pressing against the underside of former trendline support.  In fact, the rally from 2009 is an ending diagonal (wedge in classical charting) in the 5th wave position.  Longer term, the entire rally from 1982 counts in 5 waves.  The implication is that a long, drawn out corrective process is underway.  Bottom line, the index is into well-defined resistance and I’m looking for price to roll over.

KOL (COAL ETF) DAILY

Coal is one of the most important industries in Australia (take a look at KOL and AUDUSD in the chart below).  The KOL ETF sports 5 waves up from the March low.  Proposed support is VWAP off of the low, currently at 69.80.  The former 4th wave low is 70.71.  Look towards that zone for support.

KOL AND AUDUSD (MAGENTA) DAILY

AUDUSD HOURLY

AUDUSD broke down and stabilized near the center line as suspected.  Proposed resistance now is the 25 line, which has been resistance and support over the last few weeks.  That is about .7135.  Near term bearish focus is the lower parallel (extended off of the 9/25 low) near .6900.

10/13 – AUDUSD is trading at an important near term decision point.  If price follows through on today’s drop then immediate focus is the center line near .7076.  The line that was resistance earlier this month (25 line…highlighted in yellow) would then become resistance again.  If price holds and bounces then .7210 is proposed resistance.  Broader downside remains .6700-.6800 as per last week’s comments.

ENZL (NEW ZEALAND ETF)

ENZL (USD terms) looks ‘toppy’.  The ETF reversed sharply from a long term resistance line in January and in August.  Price turned lower from another line today.  Divergence with weekly RSI is pronounced and we could get a bearish weekly key reversal this week.  A turn lower would provide a tailwind for Kiwi shorts (see ENZL and NZDUSD below).

ENZL AND NZDUSD (MAGENTA) DAILY

NZDUSD 4 HOUR

NZDUSD action since the top is textbook…impulsive weakness and corrective advance.  Focus is lower towards the lower parallel of the bearish fork, which is just under the former 4th wave low (June support) at .6380.  Resistance should be .6620/30 now.

10/14 – NZDUSD didn’t quite make to to .6690 (high was .6682) but a 4 hour volume reversal triggered today so I’m willing to trade from the short side.  4 hour volume reversals (see futures chart below) have identified some big trades over the last few years.