Australia 200 for Monday, March 23, 2015
Throughout last week the Australia 200 index pushed higher to a multi-week high to just above the key resistance level at 6000, before easing lower. Over the last couple of weeks the ASX200 index has found some support at the key 5800 level which has propped it up and allowed it to rally a little and move higher. A few weeks ago the ASX200 index reversed from its highs near 6000 and started to establish a new medium term down trend before rallying higher in the last week. If it is to move lower through the trough around 5740, then lower values should be expected with the next obvious support level around 5700, however it presenting is placing pressure on the resistance at 6000.
It enjoyed a strong move higher throughout February moving from below the key 5800 level up to another multi-year high near 6000, where it met stiff resistance. At the beginning of February it spent a week or so battling with resistance at the key 5800 level which repeatedly fended off the index, resulting in it easing back a little. This level has resumed its key role and is currently having an impact on the index. Throughout the second half of January the Australian 200 index did very well and surged higher to move back above the key 5400 level and push on through to the new highs. At this time, the resistance at 5500 stood tall and fended off all advances, however this now been broken strongly through.
The moderate support from around the 5300 level held it up well for a a couple weeks before the surge higher. The short-term resistance level at 5500 has returned and now resumes its role of placing selling pressure on the index. 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.
Australia is likely to avoid a recession as the mining boom fades, the Reserve Bank boss says. The economy fell into recession during the 1980s and early 1990s after a peak in commodity prices, but Glenn Stevens is confident history won’t repeat. Coal and iron ore prices have plunged in recent months and investment in the resources sector has waned as a result. “If we come through this terms of trade event with neither a major outbreak of inflation in the upswing nor a major crash in the downswing, even if we have a period of sub-average growth in the process, we will have done far, far better than in any previous event of this kind, let alone one of this magnitude,” he told an American Chamber of Commerce in Australia lunch. “I still think that is the most likely outcome.” The RBA governor also said a falling Australian dollar would help the economy deal with the resources downturn, although not as seamlessly as hoped. “We have always said we cannot hope to fine-tune this transition, however much we may wish otherwise,” he said. Meanwhile, Mr Stevens expects US interest rates will rise in 2015 for the first time in nine years, which along with bond buying by the European Central Bank, is set to shake up financial markets.
(Daily chart below)
Australia 200 March 22 at 22:15 GMT 5995 H: 6012 L: 5927
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5800 | 5400 | 5150 | 6000 | — | — |
During the hours of the Asian trading session on Monday, the Australia 200 Index will be looking to the resistance at 6000 again and trying to push higher.
Further levels in both directions:
• Below: 5800, 5400 and 5150.
• Above: 6000.
Economic Releases
- 11:00 UK CBI Distributive Trades (23rd-27th) (Mar)
- 14:00 US Existing home sales (Feb)
- 15:00 EU Flash Consumer Sentiment (Mar)