Talking Points:
- Index might be trading at resistance between 5,570-6,600
- Price might need a “higher low” above 5,380-5,400 or 5,500 to confirm bullish trend
- A hold above those levels appears crucial for continued bullish conviction
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The ASX 200 surge higher continues. The index has seen impressive conviction to the upside in the last couple of weeks after a break above a long term range resistance around 5,380-5,400.
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 leg from 2012.
After clearing the range top resistance, the ASX continues to print new 2016 highs, and upside conviction appears strong at the time of writing.
At the moment, the index is trading at what could be an area of resistance around 5,570-5,600, with the next possible resistance level sitting at the 5,700 level figure.
The index may need to see a correction lower to gain further momentum though, and find support above the 5,380-5,400 area or the 5,500 level 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 level for potential support.
ASX 200 Daily Chart: July 28, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
