ASX 200 Technical Analysis: Rally Continues as 5,500 Provides Support
- 5,500 acts as a short term support after a break higher
- Index might need a “higher low” above 5,380-5,400 to confirm bullish trend
- A hold above those levels appears crucial for continued bullish conviction
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The ASX 200 appears to have found short term support at the 5,500 level, after a break above the level has seen continued upside momentum.
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 ASX is trading 2016 highs at the moment, and upside conviction continues to look strong at the time of writing.
Levels of possible resistance on a move higher might initially be resistance around 5,570-5,600, and the 5,700 level.
With that said, the index may need to see a correction lower and find support above the 5,380-5,400 area to form a “higher low” in order to confirm that indeed we are probably seeing a reemergence of the long term up trend.
A failure to hold above 5,380 might 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 25, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail firstname.lastname@example.org
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.