ASX 200 Ready to Finally Breakout?

• NY heads into the holiday on a high note.
• Australia a laggard in comparison to EU, US, and Asia.
• Will commodities finally cause the breakout? 
• Massive symmetric triangle being challenged.

The Australian Stock Exchange 200 will more likely than not be testing a major resistance barrier over the next couple of sessions, and it’ll be interesting to see all plays out as the Americans will be celebrating Independence Day on Thursday. In other words, there will be a lot less of a cue from New York as to which way the risk appetite is going to go.

That being said, the market is in the process of trying to break out of a symmetrical triangle, that has been forming for several weeks. If we can break above the AU$7900 level, then it’s likely that we could go much higher. If we do break above there, then it’s likely that the Australian index will follow right along with so many others around the world that have recently shown strength. As most people know, these indices all tend to move in the same direction over the longer-term.

Europe and North America

The European area of trading has been very positive for the last couple of sessions, and it now looks as if the DAX is ready to take off to the upside. The text of course is a major indication of how stock indices will perform in the European Union and is widely traded by firms around the world. On Thursday, it should be noted that the FTSE 100 is probably somewhat of an anomaly, as the UK Parliamentary Elections are going on at the same time so it may be “in its own world.”

In the United States, it is Independence Day, but it’s worth noting that during the Wednesday session we had seen quite a bit of bullish pressure in the NASDAQ 100, the S&P 500, and the Dow Jones Industrial average. All of this indices look fairly well supported, so it does make a certain amount of sense that the bullish traders will continue to push higher, which of course could have a bit of a “knock on effect” when it comes in Australia finally catching up.

Australian Dollar

When you look at the Australian Dollar Index, it is worth noting that the market has finally broken out to the upside, ever so slightly during the trading session on Wednesday. Keep in mind that this is a way to look at the Australian dollar against multiple currencies around the world, and of course most of Australia’s economy is based on the idea of exporting commodities. The stronger that the Australian dollar gets, the more headwinds that you could have, although it can also show demand for domestic commodities. The idea is to make sure that the Australian dollar doesn’t spike quite drastically. As long as the rise of the AUD is relatively stable and controlled, it’s likely that Australian exports will continue to do fairly well. This obviously will directly affect certain companies like Rio Tinto, Fortesque, and BHP.

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