Australia 200 for Thursday, May 21, 2015
During this week, the ASX200 index has drifted lower and then rallied back to the key 5650 level. It did enjoy a bit of support from the 5650 level earlier this week before falling lower a couple of days ago. The key 5800 level is still looming large and is still likely to offer resistance if and when the index returns. At the start of last week, the Australia 200 index was meeting resistance at the 5650 level; however, it was then able to move through to a one week high above 5750. Since the end of April, the Australia 200 index has seen significant declines, which has resulted in it reaching a three month low just below 5550. After making another solid run at the key 6000 level a few weeks ago but again being forced back by overwhelming supply at that level, the Australian 200 index dropped sharply to move through the 5800 level down to a two month low below 5750, before rallying well to finish out that week. Several weeks ago, the Australian 200 index showed some positive signs and moved well towards the resistance at 6000 before finishing the week strongly lower. Several weeks ago, the Australia 200 index pushed higher to a multi-year high just above the key resistance level at 6000, before easing lower throughout the last couple of weeks to below 5900.
Back in mid-March, the ASX200 index found some support at the key 5800 level, which has propped it up and allowed it to rally a little and move higher, and of course it will be hoping to receive the same again. Back in early March, the ASX200 index reversed from its highs near 6000 and started to establish a new medium term down trend before rallying higher a couple of weeks ago. 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. 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.
Australia’s central bank indicated it retains the option to ease policy if needed after cutting interest rates two weeks ago, saying slower growth would result in elevated unemployment for longer. It said a decision to remove forward guidance from this month’s statement announcing the cut, as it did with the February reduction, had been deliberate but still left open the option to alter rates further in future. “Members did not see this as limiting the board’s scope for any action that might be appropriate at future meetings,” the Reserve Bank of Australia said Tuesday in minutes of the May 5th meeting, when it cut the cash rate to a record 2 percent. The May rate reduction reflected signs that spending by firms in the resource industry and outside it “would be weaker than expected,” the RBA said. “Generally subdued growth of domestic costs, including wages, implied that inflation was expected to be slightly lower.”
(Daily chart below)
Australia 200 May 21 at 02:50 GMT 5660 H: 5669 L: 5615
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5500 | 5400 | — | 5800 | 6000 | — |
During the hours of the Asian trading session on Thursday, the Australia 200 index is holding onto the key 5650 level.
Further levels in both directions:
• Below: 5500 and 5400.
• Above: 5800 and 6000.
Economic Releases
- 08:00 EU Current Account (sa) (Mar)
- 08:00 EU Flash Composite PMI (May)
- 08:00 EU Flash Manufacturing PMI (May)
- 08:00 EU Flash Services PMI (May)
- 08:30 UK Retail Sales (Apr)
- 10:00 UK CBI Industrial Trends (May)
- 12:30 US Initial Claims (16/05/2015)
- 14:00 EU Flash Consumer Sentiment (May)
- 14:00 US Existing home sales (Apr)
- 14:00 US Leading Indicator (Apr)
- 14:00 US Philadelphia Fed Survey (May)
- JP BoJ Monetary Policy Meeting (to 22nd)