AUS200 Technical Analysis: Rally Challenged at Resistance Level
- AUS 200 Strategy: Cautious of consolidation while resistance level holds
- Index would return to September- January range after a clean break above
- 20-day MA and resistance are around 4998. Support is 4859.9
AUS 200 is testing strong resistance level of 4998 on a fourth session. 20-day moving average descended to the proximity at 4995, making topside extensions even harder. A clean break above this area would bring the ASX index back to its medium-term range as in September- early January.
The bulls should be mindful of momentum signals for early sign of a break on the topside. Upward momentum is approaching overbought territory thus may turn into a reversal, which in turn would initiate a consolidation period. For now, price action focuses on testing resistance (and subsequent upside extensions).
Support level at 4859.9 should hold throughout any consolidation, followed by firm support at 4754.
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--- Written by Nathalie Huynh, Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.