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Good morning CVELU, Last week, I highlighted increasingly oversold conditions across the Australian market and the potential for a relief rally. We got the bounce, but it proved short-lived, with the XJO rolling over and making a fresh low.
Despite this, I believe we are getting closer to the end of the current downswing. Conditions remain stretched, and I’m watching for a larger oversold rally, potentially developing later this week if we see one final push lower first.
Gold and silver remain within the key technical retracement zones I’ve been watching. Their broader bullish structures remain intact, but this is where I want to see buyers begin stepping back in.
The US Dollar Index is also testing significant resistance and showing signs of weakness. A rejection here could provide support for precious metals and commodities.
Information Technology and Consumer Discretionary continued to weaken. My view remains that both formed major cycle tops late last year, so any rallies should still be treated cautiously while their broader trends remain weak.
Crypto, meanwhile, was the standout. After showing signs of life last week, strength accelerated across Bitcoin and several altcoins.
The simple takeaway: markets rarely move in a straight line. After heavy selling, we may be approaching a point where buyers step back in and drive a stronger bounce. But a bounce doesn’t automatically mean the correction is over. For now, I’m watching where strength is returning, rather than assuming everything will rise together.
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