January 14 Update on Australian Market Index All Ords

Jan 14, 2010: 1:20 PM CST

A reader from Australia recently asked me to post an update on the Australian All Ordinaries Index, and here is such an update on a key level to watch on the weekly frame.

As S&P 500 traders will note, the Australian Index has formed an almost identical pattern on the weekly frame and also is challenging the 50% retracement level of the “Bear Market.”

For the All Ords Index, the key level to watch is the 50% Fibonacci Retracement at 4,962 (where price is now) along with the ‘psychological’ 5,000 Index level, and beyond that the 200 week SMA currently at 5,114.

Any break above 5,000 sends the index in “open air” to challenge the 5,100 level, and any break above 5,100 in the next few weeks should set-up another ‘open air’ trade to the 61.8% line at the 5,400 level.

Also, note that the 5,000 level is a prior support zone from mid-2008 that could – according to the Polarity Principle – serve as resistance (along with the 50% Retracement price of 4,962).

Beyond that, we currently have a doji (indecision/reversal) candle at this confluence resistance level as a negative momentum divergence in the 3/10 Oscillator has formed – a non-confirmation of the recent rally off the late 2009 consolidation lows of 4,500.

As such, price is in an uptrend with positive weekly 20 and 50 EMA structure, so watch the rising 20 EMA at the 4,750 level as initial support on any pullback.

It’s always interesting to take a moment and analyze overseas markets to see how they compare with the S&P 500 or other major market index.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

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