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ASX 200 Technical Analysis Talking Points:

  • The Australian stock benchmark remains tantalizingly close to record peaks
  • But steady gains have given way to more range-bound trade
  • How this plays out is crucial now

Find out what retail foreign exchange traders make of the Australian Dollar’s chances right now at the DailyFX Sentiment Page.

The ASX 200 has something for everyone at the moment and that of course is a problem.

Bulls can point to the index’s enduring close proximity to the all-time highs of 2007 and the clear endurance of the long, impressive uptrend channel which has been in place all year.

However, the more pessimistic can counter that the index has yet to top its previous notable high. That was July 5’s intraday top of 6777.0. They might then go on to say that the most recent passage of trade since the middle of June has been more about ranging than rising, and that the ASX shows clear signs of topping out.

Both arguments stand up and, annoyingly, momentum indicators aren’t coming down on one side or the other. The ASX’s Relative Strength Indicator languishes at an inconclusive 58- flagging neither overbought or oversold conditions.

However the key to which side will one win probably lies in which direction that range breaks. It’s quite broad, lying between that June 5 peak and Jun2 19’s low if 6225.8. A word of caution is warranted though, those are both intraday levels and their daily-close counterparts may provide a more meaningful band here.

They make the range somewhat narrower and put it between 6751.5 and 6623.0.

ASX200 Daily Chart

A break lower through that range base would not necessarily threaten the overall uptrend, but it would at the very least put focus on support in the 6492 area which was topped back in mid-June. Were that to fail then concerns might start to grow of a channel test.

An upside range break would be extremely positive and keep hopes of a return to those record highs very much alive. Those currently uncommitted might want to wait and see which break they get in the end. At this point, and given the clear lack of any immediate profit taking impulse at current levels- elevated by any definition, the bulls still have cause to hope.

ASX 200 Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

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