Australia 200 for Tuesday, April 7, 2015
A few weeks ago the Australian 200 index pushed higher to a multi-year high to just above the key resistance level at 6000, before easing lower throughout the last couple of weeks to below 5900. It now has its eyes firmly on the ongoing support level at 5800 where it is hoping to receive some further support, and where it is presently consolidating above. The key 6000 level remains firm and a significant obstacle and the index and markets are firmly fixed on it. Several weeks ago 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. 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.
April or May? Either way, borrowers may soon get a nice boost to their bank balances with the central bank set to slash interest rates to a new record low. While economists are divided on which month it’ll happen, all 20 surveyed by AAP expect the Reserve Bank to cut the official interest rate from 2.25 per cent to two per cent by May. The market has also fully priced in a cut by May, but expectations that the reduction could be delivered on Tuesday have ramped up over the past week on the back of plummeting iron ore prices. Barclays chief economist Kieran Davies brought forward his rate cut forecast from May to April, citing the Australian dollar’s failure to fall as dramatically as the iron ore price, which last week sank below $US50. But TD Securities chief Asia-Pacific macro strategist Annette Beacher said it would be more prudent for the RBA to hold fire until May, when March quarter inflation figures will have been released. It would also give the RBA more time to assess whether measures by regulators to curb property investor activity were actually working, as Sydney’s housing market reaches new record highs in the wake of February’s rate cut, she said.
(Daily chart below)
Australia 200 April 7 at 00:55 GMT 5934 H: 5937 L: 5880
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5800 | 5400 | 5150 | 6000 | — | — |
During the hours of the Asian trading session on Tuesday, the Australia 200 Index will be looking to the resistance at 6000 again and trying to push higher, whilst relying on support at 5800.
Further levels in both directions:
• Below: 5800, 5400 and 5150.
• Above: 6000.
Economic Releases
- 23:50 (Mon) JP Current Account (Feb)
- 01:30 AU ANZ Job Ads (Mar)
- 01:30 AU Retail trade (Feb)
- 04:30 AU RBA – Overnight Rate
- 07:00 UK Halifax House Price Index (7th-10th) (Mar)
- 08:00 EU Composite PMI (Mar)
- 08:00 EU Services PMI (Mar)
- 08:30 UK CIPS/Markit Services PMI (Mar)
- 09:00 EU PPI (Feb)
- 14:00 US IBD Consumer Optimism (Apr)
- 19:00 US Consumer Credit (Feb)
- AU RBA holds interest rate meeting
- JP BoJ Monetary Policy meeting (to 8th)