Talking Points:
- Index broke the 5,300 support level after an apparent failed attempt higher
- The ASX 200 could now possibly eye the 5,200 support
- Price is still contained inside a long term range
The ASX 200 blasted through the 5,300 support level this past Friday, after the index seemed to fail gathering enough positive momentum to move above a long term range top resistance level at 5,380.
The Index has been trading for the past months in a well-defined range between the 5,380 resistance and the 4,750 support, which coincided with the 0.618 Fib level of the long term up trend from 2012.
The ASX failed again to clear the range top and formed a “bearish engulfing” pattern with impressive accuracy on the 5,380 resistance.
The move below 5,300 appears to reject the possibility for a “higher low” at the 5,300 level, which might in turn put the focus now on the 5,200 support zone from which it seems the last leg to the upside was initiated.
A move below 5,200 could potentially put the spotlight on a possible reaction to the 200 day SMA followed by the 5,000 handle.
With that said, if the index manages to move higher and close above 5,300 this may put the focus again on the 5,380 resistance. A clear break above 2016 highs at 5,431, and the 500 day SMA might signal that the bulls have taken control, and that the long term up trend is resuming.
ASX 200 Daily Chart: June 13, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
