ASX 200 Technical Analysis: Bearish Momentum after ECB and into NFP

Talking Points:

• ASX200 Strategy: Bearish intraday trade; stops in focus given downward momentum
• Even risk drove Asian equities down, slim chance for a recovery before weekend
• Support levels: 23.6% Fibonacci at 5,078.1, 4,979.2, Sept-Nov support at 4,918.4

Aussie equities and bonds started the day at a loss after the European Central Bank’s meeting triggered extreme market volatility overnight. The ASX 200 is trading at 1.75 percent lower, with potential for even lower extensions.

Momentum signals abruptly reversed from an upside bias yesterday to a clear downside bias today due to event risk, despite resilience in the Aussie dollar. The index is on its third day of declines under a firm resistance at 5,305.

Attention is on how low the ASX would fall, especially in anticipation of another major even risk of U.S. Non-farm Payrolls tonight (Sydney). Support levels ahead are 23.6% Fibonacci at 5,078.1, followed by a recent daily low at 4,979.2. The September-November long-term support firmly contains the downside at 4,918.4.

The bulls should stay cautious with their stops in the midst of direction shifts, possibly trailing support levels. There is little chance for the index to pick up before this week ends, hence range traders who look to buy dips may find opportunities throughout the day.

Losing Money Trading Forex? This Might Be Why.

--- Written by Nathalie Huynh, Currency Strategist for DailyFX.com

Contact and follow Nathalie on Twitter: @nathuynh