Australia 200 for Wednesday, November 5, 2014
Throughout most of September the Australia 200 Index declined strongly from its multi-year high after running into resistance around 5650 back to enter its previously established trading range between 5400 and 5500, before falling further below 5200 and to an eight month low around 5120 a couple of weeks ago. It has however enjoyed a solid resurgence over the last month after getting much needed support from the 5200 level. It has now found itself back above the 5400 level and now trading near a two month high above 5500. Several weeks ago it received solid support from the 5100 level which saw it rally well to close out a couple of weeks ago. Back in early September the 5400 level was called upon to offer support as the index desperately tried to stay in touch with its range, however it fell through there before rallying strongly back up to 5400. Up until recently, the 5400 level had done well and propped up price to keep it within the range.
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.
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. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.
The Reserve Bank left the cash rate unchanged at 2.5 per cent at its Melbourne Cup day board meeting. The Australian dollar hit a one-month low of 86.46 US cents in morning trade, due partly to an upward revision to the September unemployment rate by the Australian Bureau of Statistics. Australia’s trade deficit has doubled, as a falling Australian dollar and lower commodity prices push the nation’s balance sheet further into the red. The deficit blew out to $2.261 billion in September, making it the sixth consecutive month the trade figures have been in the red. It was at $1.013 billion in August. Exports rose one per cent, while imports were up six per cent, the Australian Bureau of Statistics said on Tuesday. The Australian dollar fell 6.3 per cent in September to end the month at 87.50 US cents, making exports cheaper and imports dearer. JP Morgan economist Tom Kennedy said the weaker exchange rate had its biggest influence on the value of imports across all categories. “The swift move lower in the currency through September appears to have influenced both sides of the trade ledger, with import values the notable outperformer,” he said. “Indeed, import values recorded the strongest monthly growth rate since September 2009, vaulting 5.6 per cent higher in the month.”
Australia 200 November 4 at 22:05 GMT 5503 H: 5517 L: 5485
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5100 | — | — | 5500 | 5650 | — |
During the hours of the Asian trading session on Wednesday, the Australia 200 Index will be trying to maintain its recent good form and remain above the key 5500 level, after recently breaking through the 5200 level for the first time since February 2014, before surging higher in the last month. 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: 5100.
• Above: 5500 and 5650.
Economic Releases
- 09:00 EU Composite PMI (Oct)
- 09:00 EU Services PMI (Oct)
- 09:30 UK CIPS/Markit Services PMI (Oct)
- 10:00 EU Retail Trade (Sep)
- 13:15 US ADP Employment Survey (Oct)
- 15:00 US ISM Non-Manufacturing (Oct)