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ASX 200 Technical Analysis: Still Stuck In That Winter Ice

ASX 200 Technical Analysis: Still Stuck In That Winter Ice

David Cottle, Analyst


Talking Points:

  • The ASX 200 remains pinned in a very narrow range
  • There’s been a decent amount of volatility within it
  • But there’s still little sign of an imminent break

Check out retail investors’ feelings about the currencies you like, and those you don’t, at the DailyFX Sentiment Guide

A cold winter may not be the first thing which springs to mind when you think about balmy, South Pacific Australia, but its premier equity index has just endured one.

Northern hemisphere supremacists should bear in mind that their summer is Aussie winter, and that the ASX 200 has been stuck in a bare, 160-point range throughout. The long freeze began when modest retreat from 2017’s highs accelerated back in mid-May. The fall through 5809 marked what would become a range top which has endured ever since. The bottom of the range is 5646, plumbed on June 8.

Yes, there have been occasional intraday pokes beyond these bounds, both up and down. But on a daily-closing basis they have contained all the action to this day. It’s notable too that neither the base nor the peak of the range has been seriously threatened on a daily close since June. In other words, this range looks remarkably well entrenched.

So, is anything about to change?

Well, the ASX is apparently inching towards the bottom again but it’s probably just too coincidental that it should be doing so at a time when North Korea’s nuclear ambitions are making equity overall very jittery. Assuming we reach the now customary period of calm between Pyongyang’s provocations it seems reasonable to further assume that the ASX base will in fact hold once more.

Admittedly the index posted a rare, clear “lower high” just last week. It appears to have topped out at 5742 on Friday, below the last significant peak of 5786 hit on August 22. But this process also looks as though it might be Korea-related. There was certainly no sign of a significant shift in either moving averages or momentum indicators which might portend anything more serious.

All up if you’ve been playing the ASX range all winter and liking it, there’s probably no reason to stop. On the other hand, if you’re looking for a compelling reason to go definitively long or short right now, it’s tough to spot one on the charts.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.