Friday’s close proved to be its most bullish of the month, after dovish comments from Fed officials gave equity markets another tailwind heading into the weekend.
On Wednesday we noted the bullish engulfing pattern which hinted at a swing low. Whilst Thursday’s trade was indeed lackluster, early trade on Friday saw it break out of a possible bullish wedge formation which now targets the 6769.6 high. Support has been found at the 50-period eMA and the MACD is curling up and could soon cross back above its signal line.
- Given the bullish trend structure, Fed tailwind and resurgence of bullish momentum, we favor a move towards the 6,436-6,800 zone.
- If momentum is to peter out, we’ll keep an eye on the potential for a lower high to form as part of a topping pattern, which would require a break below the 6,600 area to confirm.
- The relative strength watchlist includes two stocks which are ripping higher and likely in need of some consolidation (at the very least) before considering entries on the daily.
- Newcrest Mining (ASX:NCM) (gold mining company) has seen a breakout of a symmetrical triangle, and we’d be keen to see if it can retrace towards the breakout level or build a new level of support. However, Friday’s small Rikshaw man Doji is a slight concern, and a notable gap lower on Monday could mark an island gap reversal at the highs to warn of a reversal.
- Whilst Coca-cola Amatil has made the cut, we’ve noticed a potential bearish wedge below resistance which is also worth keeping an eye on. A break above resistance invalidates the reversal warning, whereas a return of bearish momentum could warn of a top.
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