XAO Short Term Update

The XAO appears to be ready to head lower, but first I'd like to see the index quickly break 4075 on the downside (the start of the c wave in the small wave 2 correction) before correcting briefly and then continuing aggressively lower.

RBA Forced to chase 90 day rate - downwards

The RBA cut the Cash Rate Target to 3.5% today after a 0.5% cut last month - chasing the 90 day rate downwards. The RBA should have passed on a full 0.5% cut, however, after the 0.5% cut last month they would be feeling some political pressure to avoid such a move.

If the 90 day rate remains unchanged or falls before the next RBA meeting, expect another 0.25% cut - historically the RBA keeps the cash rate lagging the 90 bill rate by about 0.15% on average - evidence the RBA are simply following market rates and not setting them.

Medium Term Gold Update

Some recent action in the Gold price could be a strong indicator that the long awaited wave 'iv' circle has completed. Supporting this is a positively divergent MACD indicator indicating the wave 'iv' circle triangle may be complete.

This chart updates this post from 2011....

XAO Short Term Update

The 4000 level is almost upon the All Ordinaries and the possibility of a bounce is increasing with a divergent MACD and strong support levels at 4000 and 3940.

Both these target levels represent Fibonacci ratios of wave 'iii' circle as described below in the chart. MACD divergence is covered in more detail in this post and it is usually a very good indicator for determining the endpoint of wave 3's.

There is a possibility that wave 'v' circle down is complete and would mean wave '1' down is complete.