Talking Points:
- February 28’s ASX lows weren’t hugely significant at the time
- But they’ve become more so since
- Indeed, they are now a key area which bulls must defend
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Tuesday, February 28, 2017 did not go down as a banner day for the ASX 200 at the time.
No record high was made, no record low posted. Volume was not especially elevated, nor was it particularly low. A modest downtrend in place since Mid-February was arrested on that day, but beyond that it seemed to have no particular significance.
But with hindsight it looks a little more important. A lot more, in fact. For the lows of that session, around the 5675.30 level, have proved as far down as the bears dare drag the index on no fewer than three occasions since. Indeed they’ve tested it once again since we noted the phenomena a week ago.
Worryingly for those who would like to see the index push higher, those depths have been plumbed twice in the past two weeks, both admittedly on an intraday-low basis rather than the potentially more severe closing low kind. But still, that level clearly has resonance.
So a now-familiar deadlock endures. The downtrend from early May remains in place, but that crucial support point holds too. For as long as it does the bulls can hope we are consolidating for another run higher, but they won’t want to see too many more tests.
If one of them should fail, the index could be in trouble.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
