Talking Points:
- 5,500 acts as resistance to see a halt to the rally
- Index might need a “higher low” above 5,380-5,400 to confirms bulls are back in control
- A hold above those levels appears crucial for continued bullish conviction
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The ASX 200 appears to be seeing a halt to its latest upside surge, as the index seems to have found some resistance around the 5,500 figure.
The ASX 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 leg from 2012.
After moving above the range top resistance, the index printed new 2016 highs, and upside conviction appears strong at the time of writing.
If the index manages to clear the 5,500 level, further upside gains may face resistance around 5,570-5,600.
With that said, the index might need to see a correction lower and find support around the 5,380-5,400 area to form a “higher low” in order to confirm the bullish momentum is here to stay.
A failure to hold above 5,380 may be seen as a bearish signal and put the focus initially on the 5,300 figure, which could act as support.
ASX 200 Daily Chart: July 22, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
