The Australia All Ordinaries Stock Index has been bumping up against the 61.8% Fibonacci Retracement of the 2007-2009 decline for the last 8 months, forming a possible ascending triangle. This interpretation would have bullish implications for a potential breakout of that area. A less-bullish interpretation is a rising wedge; however, that is not our view. Either way, the pattern compression is getting tighter and tighter, meaning resolution should come soon.

The iShares MSCI Australia ETF is also coiling under key resistance. While it has not made any progress the past few months, is ability to avoid giving up too much ground during selloffs has been impressive. The result is a very tight bull-flag consolidation of its February to April rally. This would suggest eventual resolution to the upside.

Both the Australia Stock Market and its ETF look poised to break out from consolidation formations at key resistance. Should that occur, Aussie stocks look poised for a new upleg.

(One bonus kicker would be if the Australian government rescinded the insane resources tax, as has been rumored.)