Talking Points:
- Index found support at 5,380 after sell-off
- A hold above current levels might imply that bulls are still in control
- A break below 5,380 may be interpreted as a bearish sign
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The ASX 200 is trading higher today after the index managed to find support with a “pin-bar” rejection at the 5,380 level mentioned in the last reports.
The index was trading in a well-defined range between the 5,380 resistance and the 4,750 support for the past few months until July finally saw a breakout higher.
We suspected buyers might attempt to reenter the market at 5,380, which means that the reversal signals at this general area may still imply that the downside move was corrective, with bulls still in control.
If that is indeed the case, focus might shift for the area below 5,500 for potential resistance in the short term.
With that said, a break below 5,380 could be interpreted as a bearish sign with buyers pulling back, which may initially expose 5,300.
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: September 5, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
