ASX 200 Technical Analysis: Eyeing a Break of the 9-Month Range
- The ASX 200 tested a nine-month range top at 5,380
- Prices spiked higher following the RBA’s interest rate decision
- Long term up-trend may be resuming if a break-out finds follow through
The ASX 200 tested the 9-month range top at 5,380 following the RBA’s decision to cut interest rates, which saw a spike higher by the index. The price has been trading between the well-defined 5,380 resistance and the 4,750 support, which coincided with the 0.618 Fib level of the long term up trend from 2012.
A break above the range top at 5,380 might imply that the bulls have taken control, and that the long term up trend is resuming. However, follow through could prove limited if similar correlated “risk assets”, such as the S&P 500, do not find similar fortunes. An outcome in which the range top holds may initially put the focus on the psychological 5,000 level, which coincides with the 0.50 Fib, followed by the range bottom at 4,750.
With the ASX appearing to test sellers’ resolve at the 5,380 level, traders may look to take advantage of a breakout should an opportunity present itself. With that being said a failure to break above this level might imply a lack of bullish conviction, which may suggest a move lower is of higher likelihood.
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ASX 200 Daily Chart: May 4, 2016
--- Written by Oded Shimoni, DailyFX Research
To contact Oded Shimoni, e-mail firstname.lastname@example.org