Last TA update I mentioned to watch the reaction off $105.75.
Being a LT short accumulation zone this level was always going to be important and as the tape reads, it turns out it was.
Thursday was monthly opex and also Aussie unemployment data drop.
The move leading into 11:30am data drop was positive, however that turned out to be a bit of a stitch up with the market dumping once data showed even more strength in the job market, which in turn puts more pressure on the RBA to raise again.
Looking back on the days trading and it's pretty clear that $105.75 level is important.
Opened just below, broke through early on but traded right back down to it just as job data came out.
From there we saw an instant sell then a little later a back test on that very level before dropping once more.
Below is the days trading on the 1 minute chart for CBA.
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Zooming out and it does look like some weakness may be install for CBA over the ST.
The path of least resistance is down to backtest the $102.50 breakout level - this level is important due to recent breakout but also if we look at volume profiles for the last year there is a clear volume void back down to that very level (makes it easy to manipulate in the void as there are minimal institutional positions within this range)
Looking at the daily chart and the rejection from the $105.75 is pretty clear and lines up within the similar rejection on the most recent earnings day.
CBA daily chart below
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With US banks closing Friday mixed but more red than green the path of least resistance is lower, however I don't think this equates to a heavy sell off.
In fact, if recent history is anything to go off then any pullback will be bought up on CBA into earnings.
As you can see from the chart below CBA has had a decent run up into all recent earnings but what's happened after is certainly something to be cautious of if you are long.
Yes there has been a drop in sp from the dividend readjustment but all sell offs have come almost directly off earnings - as you can see below.
CBA daily
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Could this time be different?
Yes, it most certainly could.
US banks have rallied significantly off their earnings reports, so CBA may follow this lead.
As most of you know, I do think there are some significant headwinds on the horizon for financials but just when these come to light is anyones guess.
From an event perspective, this week is full of them - most notably is Aussie inflation data Wednesday and Fed rate decision Thursday morning.
Europe has some rate decisions and big data drops too, so there could be some real volatility this week.
Any weakness should test $102.50, below that $99.70 and high $96's would be extreme levels below if sellers took the lead.
If the sp can break above $105.75 then look to the gap to fill at $109.25 and then look to the highs at $111.43 to come into play.
Potentially some plays in both directions over the coming days/weeks but I'll let you all make your own minds up on what happens next.
As always play safe, be sure to DYOR and good luck whichever way you trade...
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