MARKETS SPECTATOR: Breaking the ceiling
For the past year, the ASX has been hitting resistance at a little above 4400. Will the rate cut finally push it through this psychological barrier?
On the other hand, given the strong rally yesterday and the ‘selling off from highs’ pattern we’ve witnessed in the US during the last two sessions, traders may look to sell at resistance (above chart) and re-enter the market on a pullback.
Traders will also be watching the Australian dollar during the Asian session today after it was re-rated lower in overnight trade. It’s trading around the 1.0260 level, approximately 1 cent lower than just before yesterday’s rate decision. Following big moves like this, it’s quite common to see a bit of a short covering rally during Asian trade as those short look to book some quick profits and Australian traders buy the weakness, hoping for it to bounce further.