Australia 200 for Thursday, January 22, 2015
During the last week or so the Australia 200 Index has eased back again under the 5400 level after making numerous attempts to clear it over the last month, which has seen it drop to a three week low below 5250. However in the last day is has surged higher to move slightly back above the key 5400 level to a one week high as it desperately tries to hang on to this important trading range for the index. The moderate support from around the 5300 level held it up well for the last week before the surge higher. The short-term resistance level at 5500 continues to loom large and is placing selling pressure on the index as well as battling with likely resistance at 5400 again too. Throughout most of November and December, the Australia 200 Index fell steadily lower down towards support around 5150 and two month lows before rallying back above 5400 again. Over the last few weeks the Australia 200 index has struggled with resistance at 5400 which has forced it lower time and time again. The 5400 level has been a major player for the last 12 months and the index must get back above this level to encourage more buying and bullish sentiment.
It enjoyed a solid resurgence throughout October after getting much needed support from the 5200 level, which has resulted in it moving back above the 5400 and 5500 levels, around a two month high. Throughout most of September the Australia 200 Index declined strongly from its multi-year high after running into resistance around 5650 back to enter its previously established trading range between 5400 and 5500, before falling further below 5200 and to an eight month low around 5120 a few weeks ago. Several weeks ago it received solid support from the 5100 level which saw it rally well to close out a couple of weeks ago.
Back in early September the 5400 level was called upon to offer support as the index desperately tried to stay in touch with its range, however it fell through there before rallying strongly back up to 5400. Up until recently, the 5400 level had done well and propped up price to keep it within the range. In its recent fall at the beginning of August it moved down to a three week low around 5375, however it received solid support at the 5400 level which has allowed to consolidate and rally higher.
The RBA should slash interest rates to a fresh record low next month, Westpac’s top economist says, as new figures show consumers remain pessimistic. Bill Evans says delaying a rate cut until March, as markets are predicting, would be “awkward” for the RBA. He argues a February cut, following what are expected to be weak December quarter inflation figures, is the better option. The RBA is due to release its next major economic report card – the quarterly Statement on Monetary Policy – just three days after its February 3 board meeting, giving the central bank a good opportunity to explain its decision and update its inflation forecasts, Mr Evans said. “The prospect of moving in February should be attractive to the bank,” Mr Evans said on Wednesday. “Delaying the move to March, which seems to be favoured by markets, makes the Statement much more awkward, particularly if, as we expect, the bank’s inflation forecasts will be lowered significantly.” Westpac expects the RBA to cut rates twice this year, in February and March, to a new record low of two per cent.
Australia 200 January 21 at 22:15 GMT 5407 H: 5408 L: 5304
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5150 | 5100 | — | 5400 | 5650 | — |
During the hours of the Asian trading session on Thursday, the Australia 200 Index will be trying to maintain price above the key 5400 level after surging higher in the last day.
Further levels in both directions:
• Below: 5150 and 5100.
• Above: 5400 and 5650.
Economic Releases
- 09:00 EU Flash Composite PMI (Jan)
- 09:00 EU Flash Manufacturing PMI (Jan)
- 09:00 EU Flash Services PMI (Jan)
- 09:30 UK Public Borrowing (PSNB ex interventions) (Dec)
- 10:00 EU Flash Consumer Sentiment (Jan)
- 12:45 EU ECB – Interest Rates
- 13:30 US Initial Claims (17/01/2014)
- 14:00 US FHFA House Price Index (Nov)
- 14:45 US Flash Manufacturing PMI (Jan)
- EU ECB’s Draghi gives press conference after interest rate announcement
- JP BoJ Publish Monthly Report