Australia 200 – Eyes on Resistance at 5650 Again

Australia 200 – Thursday 30 July 2015

A few weeks ago the ASX200 enjoyed a solid resurgence back up from support at 5400 to a new three week high above 5650, however over the last week it has met resistance around 5650 and been forced lower. This has resulted in it drifting lower below 5650 however it finished last week enjoying some support from the 5500 level which has held it up well this week allowing it to rally higher again back towards the resistance at 5650.  Over the last month the index has been able to find some much needed support around 5400 however with lower peaks over the same period. During this time the 5400 level has been severely tested but it has held up very well. Several weeks ago there was a strong reversal and sharp fall as the ASX200 index had resumed its medium term down trend and reached a five month low below 5400 in the process.

Throughout the last month or so it has fallen sharply a number of times yet enjoyed solid support from 5500, however this level has now given way. In the second half of May the medium term down trend in the ASX 200 had reversed however just as quickly it has taken out the lows around 5550 and moved lower to its lowest levels in five months. The 5500 level has been solid in the last few weeks and provided reasonable support to the index however too much bearish sentiment broke through this level. A little higher up at 5800, this level remains large and continues to apply downwards pressure on the index, as this has been a significant level for the index throughout this year. It will be interesting to see whether the index can garner enough support from the short term support level around 5500 which has propped the index up over the last week or so.

Back in early May the Australia 200 index declined sharply from highs around the key 6000 level and whilst it paused a little around 5800 and enjoyed some support, it continued to decline down to a three month low around 5550. Even if it was able to rally higher and move back through the key 5800 level, the index will rejoin the congestion range between 5800 and 6000 and likely find it difficult to move through there quickly. Accordingly the 6000 level which was spoken about at length for most of this year is now a distant level and is probably some time away from being seen again.

(Daily chart below)

Australia 200 July 30 at 00:25 GMT   5633   H: 5640   L: 5587

Australia 200 Technical

During the early hours of the Asian trading session on Thursday, the Australian 200 index will be trying to rally and get back through the resistance at 5650.

Further levels in both directions:

• Below: 5500 and 5400.

• Above: 5650, 5800 and 6000.

Economic Releases

• 23:30 (Wed) JP CPI Core (Nation) (Jun)
• 23:30 (Wed) JP CPI Core (Tokyo) (Jul)
• 23:30 (Wed) JP Real Household Spending (Jun)
• 23:30 (Wed) JP Unemployment (Jun)
• 01:30 AU Import & Export price index (Q2)
• 01:30 AU Building approvals (Jun)
• 09:00 EU Business Climate Index (Jul)
• 09:00 EU Consumer Sentiment (Jul)
• 09:00 EU Economic Sentiment (Jul)
• 09:00 EU Industrial Sentiment (Jul)
• 12:30 US Core PCE Price Index (1st Est.) (Q2)
• 12:30 US GDP Annualised (1st Est.) (Q2)
• 12:30 US GDP Price Index (1st Est.) (Q2)
• 12:30 US Initial Claims (25/07/2015)

* All release times are GMT

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