The Australia 200 Index is presently on quite a roll as it has enjoyed a solid three week period which has seen it move strongly up through both the 5500 and 5550 levels to reach a new six year high around 5620 in the last day or so. In recent weeks it has discovered a new key level to deal with after running into a short term resistance level at 5550, which in the last few days has provided some solid support. It reversed strongly a few weeks ago bringing it back down to almost touch the 5400 level before rallying back higher again. At the beginning of June the Australian 200 Index fell and broke back down through the key 5500 level towards a four week low around 5400 before consolidating and resting on support there for an extended period. These two levels have firmly established themselves as significant and any substantial break to either side will most likely be a significant move and be closely monitored. It is quite likely many are sitting on the sidelines waiting for the break before committing as they continue to watch the index move between these two levels.
Back at the end of May, it moved back and forth between the two key levels of 5500 and 5550 before the recent fall. Over the last couple of months the Australia 200 Index has formed an amazing attraction to the key 5500 level as it spent a considerable amount of time trading around it. A couple of weeks ago, the index fell away heavily back down to support around 5400 before returning to the key 5500 level just as quickly, as if gravity had pulled it back. Throughout the last couple of months it has been placing ongoing pressure on the resistance level at 5500 and a few weeks ago it was finally able to move through to a three week high before easing back again to this key level. Several weeks ago it slowly but surely eased away from its multi-year high achieved near 5560 however the following week it fell reasonably sharply and started looking towards the 5400 level which is near where it currently sits. In doing so it returned to back under the key 5500 level which has provided some reasonable resistance over the last few months.
For the bulk of the last few months, the Australia 200 Index has traded roughly between 5300 and 5500 therefore its return to back under 5500 was not surprising. The index has done well over the last couple of months to move steadily higher from support around 5300 up to beyond 5500, forming higher peaks and higher troughs along the way. The support level at 5300 may also be called upon should the index fall lower and will also likely play a role in providing some buffer from any decline. Since February, most of the trading activity has occurred between 5400 and 5500 therefore the former level may also be called upon to prop up prices. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.
Prices in the one of the world's most expensive housing markets are set to pick up pace this year, triggering renewed warnings of a potential bubble brewing. According to a note from HSBC this week, while growth in real estate prices showed some signs of cooling in May, a strong bounce back in house price data and auction clearance rates in June and July could mean prices will end the year 10 percent higher. "While we remain of the view that Australia does not currently have a housing bubble, it seems likely that if the current housing market trends were to persist for too long, there would be a risk of inflating one... the longer mortgage rates remain at low levels, the more this risk grows," said Paul Bloxham, chief economist for Australia and New Zealand at HSBC. Prices in Australia have more than tripled since 1997, on the back of low interest rates, high incomes and growing demand from Asia. HSBC says signs of exuberance are most acute in Sydney, which was branded the second-most unaffordable city to buy a house in the English-speaking world by the Demographia International Housing Affordability Survey published earlier this year. Prices in the city have risen 15 percent in the past 12 months to the end of June, compared to only 7 percent weighted average of other capital cities, HSBC noted. Meanwhile, the investor share of Sydney property has reached record highs.
Australia 200 July 31 at 03:05 GMT 5609 H: 5624 L: 5596
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5400 | 5300 | 5000 | --- | --- | --- |
During the hours of the Asian trading session on Thursday, the Australia 200 Index is just easing back slightly from its new highs around 5620after moving strongly for the last few weeks. It is presently trading above the key levels of 5500 and 5550 and will be looking to see if it can maintain the break and stay above. For most of this year the Australia 200 Index has moved well from the lower support level at 5000 up to the multi-year highs above 5500 in the last month or so.
Further levels in both directions:
• Below: 5400, 5300 and 5000.
• Above: ---
Economic Releases
- 01:30 AU Building approvals (Jun)
- 01:30 AU Export & Import price index (Q2)
- 05:00 JP Housing starts (Jun)
- 06:00 JP Construction orders (Jun)
- 09:00 EU Flash HICP (Jul)
- 09:00 EU Unemployment (Jun)
- 12:30 CA GDP (May)
- 12:30 US Employment cost index (Q2)
- 12:30 US Initial Claims (26/07/2014)
- 13:45 US Chicago PMI (Jul)