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ASX 200 Technical Analysis: Elevated Trading Range Looks Solid

ASX 200 Technical Analysis: Elevated Trading Range Looks Solid

2018-08-07 02:00:00
David Cottle, Analyst

ASX Technical Analysis Talking Points:

  • The ASX 200 is in a broad range, which includes its most recent ten-year highs
  • It is no stranger to this kind of trade
  • However, bulls can probably still hope for further gains

Get live, interactive coverage of all major Australian economic data at the DailyFX Webinars

The ASX 200 has settled into a broad range trade and, as there seems little obvious sign that the range is set to break, it could be all traders have to play with for the moment.

ASX 200 Technical Analysis: Elevated Trading Range Looks Solid

The range’s lower limit comes in at 6193.9, July 4’s close. Its top is at 6332.5, the intraday peak of July 27.

The ASX 200 has been no stranger to enduring range trade in the recent past, withone notable bandenduring all the way from May to October 2017.

The current range may not have anything like that kind of time, but all the same, the ASX’s 20-, 50- and 100-day moving averages remain in chronological order without any of the crossovers, which might suggest a near-term break either way. Moreover, the Relative Strength Index suggests neither overt overbuying or overselling. It stands at 40, when a score above 70 or below 30 usually rings alarm bells.

Bulls may take some comfort from the fact that the Sydney stock benchmark has remained close to ten-year highs since mid-June without any obvious selling pressure dragging it lower. However, the impetus to push much higher from these elevated levels seems lacking also.

So, with the daily chart apparently offering few clues, it might be helpful to turn to the monthly.

ASX 200 Technical Analysis: Elevated Trading Range Looks Solid

Here we find the ASX still very much in the impressive uptrend, which has contained trade since the baleful effects of financial crisis loosened their grip back in March, 2009. The index still looks biased higher on the basis that it remains above both the previous significant peak, which came in in March of 2015 and the less important top registered in January of this year.

It’s not unreasonable then to hope for further gains, but for now it might be best to simply play the range.

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

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