AUS200

I will try and answer some questions in this post and perhaps in another if I can find some clear charts to post. There are jitters forming in the market with the UK voting on its future within the EU, and given the extent of the British reach around the world, this will have many ripple effects in many markets. Finding quality charts as voting day approaches will not be easy.

However, here I present the AUS200 Australian index. I have not covered this before and the economy of Australia is about to under go some tough times from what I can see. This should not come as any surprise, the mining industry was the first to send out warning signs, housing will following and folks already leaving for work abroad. Any politician in Government will do all they can to talk the opposite, but the charts dont tell porkies.

This will be a long term view of the AUS200 because of price action alone and day trading this is not good until it settles into full bearish mode.


Monthly chart.


Starting on the lower left, there is a point from where this market took off strongly during the boom times. Like many other countries the investors spent heavily and pushed hard. At the top we see supply that will have caught and burned many. There was warning of this before the top was reached with a large bullish closing candle with a large tail. The question you must ask when you see such price action especially on high time frames like the monthly is, if the market is so strong, how could price drop so quickly and violently. We know only pro money could do this and it was an exercise in taking out stops and grabbing more orders for the final push to the top. We also know that when price shot above the close of this candle where many got taken out, will have jumped back in again in full bullish mode. Greed takes over from the logical brain and such warnings tend to happen once and it is best to heed it once.

As price fell through 2008 it eventually hit the old area of demand and we see price reacting accordingly. The same traders who got stung at the top will have gotten stung here again, and the same warnings came up, a large tail which screams buyers coming in with deep pockets. A quickly test of this area came in early 2009 and price turned bullish into the near term supply I show on the chart. Of interest is the reaction in price, it got thrown into a relatively narrow range for around a year. We then see a large drop and terminating with a candle showing a large tail. If you think buyers you are correct. This was tested after a choppy ride back up into the range and price falls again but with much less force. Several times from the top of this range will fill more and more short orders and eventually weaken the area enough to where the bulls can spend a lot less money in turning the market.


After the testing area price finds enough willing buyers to push up through the range and even has enough orders to gap up, test quickly, grab more lower cost bullish orders and break the top of the range. From here we see a lot of choppy price action into the large supply candle from the left. I marked this with a blue line. I would not have been looking higher because the bullish candle to the left of this with the large tail has established itself as an area to keep an eye on.

Given we hit supply and now have fallen off, we want to see if nearer term supply is working as expected and in the last candle of the current month we see it is working so far.

Weekly chart.


A closer look at what is still very choppy price action and a sign of no strength from buyers. The area I marked off as run for orders shows how price was marked up to entice buyers and take additional time to fill short orders while price was above recent highs. Once price fell back into the range, we can see several areas where it was clear the bulls were not interested and the bears had a chance to take control. 

At the moment we have hit recent supply and price is falling. There may well be some day trading action we can take here and if the swings are within your means. 

I am looking for a target below the blue line, this is the best place to find clean fresh buyers and it is a good area untouched for some time. There is some buying below price, but none of it looks particularly strong. Time will soon tell.

 

Daily chart


Here you will get a sense of how choppy price has been. Very ugly nasty and account hurting for the small trader. But wait for the main areas to revisit and it gets real interesting and after a time you will see how price gets cleaner as pro money works in enough orders to show us a path.

The top red line is an area of supply. To the right we see a sharp stab through it and close below, just following on from that we see a close near to the top of the spike.....and the word to focus on is, near. Without a higher close and a continuation it was given price will fall back. But it done more than fall back, look at the days candle with a large red body closing on its lows, that is powerful and it formed in the right place. A retest of this is what we want and it came about a few days later and right now we are falling again and with good force behind it. 

You can see the retest was used to full plenty bearish orders and all timed so that price would not fall off a cliff and pro money allowed time to support this move. You would think they planned all this :)

And finally at the bottom I placed a box showing where the most recent buy orders happened and we can expect this to become their target. But I have my doubts it will hold up price for too long and at some point, price will march lower as is expected on the higher time frame charts.