Technicals | Apr 08 2010
By Chris Shaw
As US equities have risen of late the TechWizard has been watching closely as in his view a major top in equities is forming this month.
His technical indicators support this view, as the Wizard notes there is now a clear divergence between the MACD indicator and price action for the Dow Jones Industrial Average. The Wizard suggests this indicates a sell-off is coming and it could come as early as in the next few trading days.
Whether the sell-off takes the form of simply a correction within an ongoing uptrend or whether it will mark the start of a new bear market will only become clear over time according to the Wizard.
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In addition, the Wizard has also spotted similar divergence between the MACD indicator and price action on the Australian dollar/US Dollar chart.
At the same time the currency is touching the top Bollinger Band on the Wizard's price chart, so he suggests now is ma ake or break time for the currency to push higher.
The Wizard favours a pull back in the Aussie dollar to US91c from here.
Combining both observations, it is the TechWizard's view that we are about to witness a general retreat in risk appetite, which should see risk assets correct from near 18 month highs.
