Talking Points:
- Index lost the key 5,380 support level, suggesting weakness
- A hold below the level could imply a return to range bound trading
- 5,300 in focus for the short term
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The ASX 200 is trading lower today, after losing the key support level at 5,380 mentioned in the last reports.
The index was trading in a well-defined range between the 5,380 resistance and the 4,750 support until July saw a breakout higher.
As we suspected, buyers attempted to reenter the market at 5,380 with a “pin-bar” rejection, but the failure to hold above means a return to the range area from recent years.
In this context, a hold below 5,380 could be interpreted as a bearish sign with sellers gaining back lost ground. This may initially expose 5,300 for potential support followed by 5,200.
If buyers manage to find support, bulls could have some hope yet for another attempt at 5,380- but as long as the levels holds as resistance pressure seems to be to the downside.
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 9, 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
