Australia 200 for Monday, May 12, 2015
The last few days to finish last week saw significant declines in the Australia 200 index, which has resulted in it reaching a three month low just below 5550. To start this new week the index is threatening to break lower again. 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. It has since reversed again and looks threatening to remain below 5800. 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 to 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. 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.
Business confidence remained steady in April, while conditions eased slightly, as firms await the federal budget Tuesday night. NAB’s widely watched Monthly Business Survey showed that confidence held at +3 last month, which is a little below average levels. The bank’s economists said that is not a strong enough level to see economic improvement. “Until confidence lifts significantly it is difficult to see a sustained economic recovery developing – to date rate cuts have not appeared to do much and it will be interesting to see what if anything this week’s federal budget will do,” they noted in the report. Conditions eased slightly to +4 from +6 in March, but still remain higher than they were in February and around the survey’s longer term average. Both trading and profitability eased last month, but trading remains at +10, while profitability is at a modest +5. Backing up a downward revision to the Reserve Bank’s employment forecasts made in its Statement on Monetary Policy on Friday, the NAB survey’s measure of employment dipped back into contraction at -2.
(Daily chart below)
Australia 200 May 11 at 23:30 GMT 5571 H: 5679 L: 5566
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5550 | 5400 | — | 5650 | 6000 | — |
During the hours of the Asian trading session on Tuesday, the Australia 200 index will be looking to reverse and repair some of the damage from its recent strong falls.
Further levels in both directions:
• Below: 5500 and 5400.
• Above: 5650 and 6000.
Economic Releases
- 23:50 (Mon) JP Current Account (Mar)
- 23:50 (Mon) JP Bank Lending Data (Apr)
- 01:30 AU Housing & Lending Finance (Mar)
- 05:00 JP Leading indicator (Prelim.) (Mar)
- 08:30 UK Industrial & Manufacturing Production (Mar)