The Aussie index XJO has resilient over the last month as they have been outperforming US stocks, having received a few key tail winds with a pro-business re-election in the Federal Government, an attempt for the Government agencies to loosen credit standards and the RBA giving its strongest indication they are prepared to cut rates soon with multiple cuts now priced in by the market.
So its not surprising that the pullback so far for the XJO has been relatively mild, having finished the month respecting its old resistance level now support area around the 6,360 level. Since the XJO price action has been in up trend, the respect of its most recent support so far is positive for the index to remain in trend.
Looking ahead for June we have to be watching to see if a few key bullish points change for the XJO. The index has been comfortably creating higher lows indicating the bulls are still in control of the Aussie index. If we see further pullbacks with international markets volatility, its important that we hold the uptrend line around 6,300 level as a first line of defense.
If the uptrend level around 6,300 fails for the XJO, then we need to watch if the price action closes below the 6,220-30 support level. If this occurs this would be the first lower low in 2019 and would signal uncertainty as the bulls would have lost control. If this is followed up by a lower high formed in June, then it would be time to start to be bearish Aussie stocks. However for now there is no reason to not remain bullish, for the XJO index despite the pullback experienced.
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