Australia 200 for Wednesday, September 10, 2014
For about a week now the Australia 200 Index has declined from its multi-year high after running into resistance around 5650 back to consolidate just under the 5600 level. For the last couple of weeks the Australian 200 Index has traded in a narrow range between 5600 and 5650 although it enjoyed a small excursion when it surged higher to achieve a new multi-year high around 5680. To finish out last week however, it fell sharply and broke back down through the 5600 level, which some may have been expecting to offer support. This has all been preceded by a solid move higher bouncing strongly off the support level at 5400. Just prior to the surge it fell sharply over a couple of weeks returning back to more familiar territory between the 5400 and 5500 levels, before the recent strong rally. In its recent fall at the beginning of August it moved down to a three week low around 5375, however it received solid support at the 5400 level which has allowed to consolidate and rally higher. The solid move higher throughout July saw it move strongly up through both the 5500 and 5550 levels to reach a then six year high around 5620. In recent weeks it has discovered a new key level to deal with after running into a short term resistance level at 5550, which earlier last week provided some solid support. It reversed strongly several 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.
The 5400 and 5500 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.
Australian consumer confidence has lifted - helped by continued low interest rates and rising housing prices. The ANZ/Roy Morgan weekly consumer confidence index rose 0.6 per cent in the first week of September. The index has stabilised around its long run average over the past four weeks after a sharp decline around the time of the federal budget in May. ANZ chief economist Warren Hogan said rising confidence that households have in their family finances is showing continued momentum. "The recent stabilisation in confidence is a positive sign and ANZ's base case remains that consumer spending will grow moderately this year, before improving next year," he said. "The labour market will be important for the outlook, so it is encouraging that the August ANZ job ads report yesterday showed that labour demand is gradually strengthening." A measure of Australian business conditions pulled back from four-year highs in August as sales and profits eased, while booming conditions in the construction sector contrasted with gloom among miners. National Australia Bank's survey of more than 400 firms showed its index of business conditions halved to +4 in August, so unwinding much of July's 5 points gain.
Australia 200 September 10 at 00:15 GMT 5590 H: 5590 L: 5590
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5400 | 5300 | 5000 | 5650 | --- | --- |
During the hours of the Asian trading session on Wednesday, the Australia 200 Index will be looking to see if it can reverse and resume its recent surge, continuing to push higher from its recent six year high around 5660. 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: 5650.
Economic Releases
- 00:30 AU Westpac Consumer Confidence (Sep)
- 12:30 CA Capacity Utilisation (Q2)
- 14:00 US Wholesale Inventories (Jul)
- WLD OPEC Monthly Oil Market Report