ASX 200 Technical Analysis: Index Trading At a Crucial Support Area
- Index trading at potential support after a push to the downside
- Key for current levels to hold if bullish control is to remain
- A break below 5,380-5,400 could be interpreted as a bearish sign
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The ASX 200 is trading lower for the sixth consecutive day, after the index failed to hold above a support area around 5,500.
The Index was trading sideways since the beginning of the month, between the 5,500 support and the 5,600 resistance area, which meant that a break below 5,500 could see participants focus on the 5,380-5,400 zone for potential support.
Indeed, the index seems to have found a slight pause to the decline around May swing highs at 5,431.
At this stage, keen buyers might attempt to re-enter the market, which means that reversal signs at this general area may still imply that the downside move was corrective.
A break and hold below 5,380 could be interpreted as a bearish sign with buyers failing to regain control.
It’s important to note that volatility is still printing its lowest levels since September 2014 (based on a 20-day ATR study).
ASX 200 Daily Chart: August 31, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail firstname.lastname@example.org
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.