ASX 200 Technical Analysis Talking Points:
- Another upside break has failed
- The former range is back in play
- Watch its base though, it may have moved a little higher
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The ASX 200 provided investors with one spurious upside range break back in mid August. Now, with September just getting going, it has shown them yet another.
The last upward foray took place between August 27 and 29, but it has now petered out, taking the index back below the 6329.5 level above which it seems disinclined to spend much time.
On a daily close basis the ASX did manage to set a higher high on August 29, but it didn’t surpass the previous intraday peak. That was the 6384.70 set on August 20.
The index is now back in the band between that level and the 6198.1 lows which has, with those two short exceptions, bounded trade since July 6.
So, what next. Well, fundamentally this is still a benchmark which looks reasonably comfortable close to ten-year highs. That said, two attempts to break new, higher ground have now failed in the past three weeks alone. It might be rash to bet on another.
Current weakness will probably find a degree of support above its range base, in the 6251 area around which so much of August’s trade centered. If current falls are indeed halted there on both a daily and a weekly closing basis then the bulls may be able to gird themselves for another crack at the upside, something I think it might be wise to fade.
However, the ASX probably won’t be in more serious downside trouble unless that range base comes under threat. At 6198 it is a reassuring 100 points or so below the current market. The best plan still looks like playing the old range unless that threat materializes
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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!
