Talking Points:
- ASX 200 finding support at the key 5,380 level
- 5,500 acting as resistance in the short term
- Break to either side may determine short term direction
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The ASX 200 rally came to a pause after the index hit resistance at the 5,500 level we mentioned in the last couple of months.
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, followed by a sharp decline back inside that range.
The index blasted to the upside again after forming a bullish “Morning Star” pattern around the 5,200 support, but the 5,500 level proved its merit as resistance and the index retraced to find support at the 5,380 level once more.
A hold above 5,380 still appears to put the bulls in control, but a move above 5,500 might be required for any real conviction and continuation in the short term.
On the other hand, a move below 5,380 may be interpreted as a bearish development and could shift focus to 5,300 for potential support.
ASX 200 Daily Chart: October 25, 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
