Australia 200: Eyes Remain On Resistance At 6000

Australia 200 for Monday, April 13, 2015

Throughout last week the Australian 200 index showed some signs and moved well towards the resistance at 6000 before easing away slightly, however it remains fixed on the level and looks poised to move through it. A few weeks ago the Australia 200 index pushed higher to a multi-year high to just above the key resistance level at 6000, before easing lower throughout the last couple of weeks to below 5900. It is receiving ongoing support at 5800, which is helping its latest push towards 6000. The key 6000 level remains firm and a significant obstacle and the index and markets are firmly fixed on it. Several weeks ago the ASX200 index found some support at the key 5800 level which has propped it up and allowed it to rally a little and move higher, and of course it will be hoping to receive the same again. Back in early March the ASX200 index reversed from its highs near 6000 and started to establish a new medium term down trend before rallying higher a couple of weeks ago.

It enjoyed a strong move higher throughout February moving from below the key 5800 level up to another multi-year high near 6000, where it met stiff resistance. At the beginning of February it spent a week or so battling with resistance at the key 5800 level which repeatedly fended off the index, resulting in it easing back a little. This level has resumed its key role and is currently having an impact on the index. Throughout the second half of January the Australian 200 index did very well and surged higher to move back above the key 5400 level and push on through to the new highs. At this time, the resistance at 5500 stood tall and fended off all advances, however this now been broken strongly through.

Throughout most of November and December, the Australia 200 Index fell steadily lower down towards support around 5150 and two month lows before rallying back above 5400 again. Over the last few weeks the Australia 200 index has struggled with resistance at 5400 which has forced it lower time and time again. The 5400 level has been a major player for the last 12 months and the index must get back above this level to encourage more buying and bullish sentiment. It enjoyed a solid resurgence throughout October after getting much needed support from the 5200 level, which has resulted in it moving back above the 5400 and 5500 levels, around a two month high.

The big moment for economists this week was the Reserve Bank’s decision to keep the cash rate on hold for a second straight month. Westpac’s chief economist Bill Evans was one of a sizeable number who had thought an April cut more likely than not. Even so, he had acknowledged a good chance of a May move in keeping with the historical pattern of the RBA favouring moves soon after the release of quarterly inflation figures. Westpac now expects a May cut, with Mr Evans highlighting the RBA’s use of the term “for the time being” to describe the appropriateness of the current cash rate of 2.25 per cent. “Following the recent introduction of that term in the March statement, we observed that on the eight occasions that it was used since the beginning of 2009, there has always been a follow-up move within two months,” he said. ANZ’s chief economist Warren Hogan suggested there may not have been a move in April “simply because the case is not there yet”. It could even be that there will be no more cuts this year, he said. “However, we doubt that this recent monetary policy adjustment will be a one and done, and we have pencilled in a cut in May.”

(Daily chart below)

Australia 200 Daily Chart

Australia 200 April 13 at 00:40 GMT 5975 H: 5981 L: 5919

Australia 200 Technical

S3S2S1R1R2R35800540051506000——

During the hours of the Asian trading session on Monday, the Australia 200 Index will be looking to the resistance at 6000 again and trying to push higher, whilst relying on support at 5800.

Further levels in both directions:

• Below: 5800, 5400 and 5150.

• Above: 6000.

Economic Releases

  • 23:01 (Sun) UK BRC Retail Sales Monitor (Mar)
  • JP BoJ release minutes

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