ASX 200 Tests Support Level and Lower Bound
- Strategy: Prepare for a break out of bounds, keep watch of stop loss
- A breach would give leeway to downward reversal
- Strong downward momentum likely persists
The ASX 200 was fast to approach a support level and lower bound of range at 5074. A break out of bounds would open up the area below that and increase chances of a repeat of the 4754-5074 range.
Downward momentum has built up strongly which may continue until next week. The ASX remains vulnerable on the downside, with only a weak support level at 5035 to hinder lower moves.
Traders with long positions should keep a close watch of support and exercise their stop loss if necessary. The same goes for investors who positioned for range trade. On the other hand, a break out of bounds might lead to a downward reversal and present opportunities to enter short positions.
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Daily Chart - Created Using FXCM Marketscope
--- Written by Nathalie Huynh, Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.