Australian Index Continues to Respect the Same Level

• ASX opens up with a bang.
• ASX 200 struggles with AU$8000 during the session.
• Commodities don’t seem willing to help.

The ASX 200 continues to respect the same level, the crucial AU$7900 region. This is an area that previously had been important due to the fact that it was the top of the major ascending triangle, and of course it is a large, round, psychologically significant figure, so a lot of people would be looking at it.

During the Monday action, we saw the ASX 200 bounce from the AU$7900 level, and at one point even threatened to break above the AU$8000 level. Because of this, it looks like a typical “breakout, pullback, and continuation set up.” Whether or not that ends up being the case remains to be seen but it should be noted that the AU$8000 level, lease up to this point, has offered a bit of a barrier.

At the Mercy of Global Indices

Keep in mind that the ASX 200 does not operate in a vacuum, and of course will have a lot of influence pressed upon it by other indices such as the S&P 500, the NASDAQ 100, the FTSE 100, and of course the CAC and DAX. In other words, in this modern environment, we see a lot of correlation between markets. As things stand midday on Monday, the US indices do look like they are very choppy, yet positive. Part of this is probably due to traders trying to sort out what Joe Biden leaving the race means, and therefore there might be a little bit of confusion. Either way, indices in the United States had been sold off a bit and a little bit of value hunting certainly makes sense.

Commodities

As usual, the ASX 200 will be highly sensitive to the commodities markets, as major players like Rio Tinto, Fortesque, BHP, and others continue to attract a lot of foreign investment. Quite frankly, for most traders outside of Australia, it’s essentially thought of as a commodity-based index, despite the fact that there is quite a bit of financial innovation in Australia, especially when it comes to Asiatic construction and economic growth.

Copper fell a bit during the trading session, breaking below the 200-Day EMA, as it threatens the $4.20 level. Because of this, there could be a little bit of hesitation in Australia, as New York traders focus on the idea of global expansion versus an economic slowing condition.

Gold markets also have fallen, breaking well below the crucial $2400 level. By doing so, it looks like they could go looking to the 50-Day EMA underneath, which could bring more pressure to bear on Australia. Despite the fact that the ASX 200 took off early in the session, it is worth noting that we have not seen the momentum necessary to break above the crucial AU$8000 level, and commodities do not seem willing to give us that extra boost. At the end of the day, we may need to see global strength in equities and commodities to help push the ASX 200 higher and continue the overall uptrend that the market had been in previously.

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