Australia 200 for Wednesday, November 26, 2014
Over the last few weeks the Australia 200 index has returned some of its recent gains falling from above 5550 down to a one month low below 5300 before finding a little support around 5340, which has propped it up a little to finish out last week. Over the last few days the index has been content to consolidate just below the 5400 level waiting for some direction. The 5400 level is now providing some resistance and placing selling pressure on the index. Prior to that it had 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. 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 few weeks ago. 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.
Abundant supply is driving commodity prices lower, but the good news is that Chinese demand for Australian resources will continue as its economy evolves, the Reserve Bank says. A dramatic increase in commodity exports from Australia and other countries has increased global supply, pushing commodity prices down, RBA head of economic analysis Alexandra Heath said. Her comments to the NSW Mining Industry and Suppliers Conference in Sydney on Friday came after the iron ore spot price this week fell to a fresh five year low of around $US70 per tonne. “Much of the fall in iron ore and coal prices we have seen over the past year or so is the result of increasing global supply, but recently there has also been some easing in demand associated with slower growth in Chinese steel production,” Dr Heath said. “The resulting fall in Australia’s terms of trade is expected to weigh on household income.” But while demand from China was slowing, it would continue to have a “huge appetite” for commodities of many kinds, she said. Dr Heath said China’s urbanisation process had some way further to run, meaning demand for commodities to build housing, infrastructure, utilities and public buildings.
Australia 200 November 25 at 21:50 GMT 5363 H: 5371 L: 5302
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5340 | 5100 | — | 5650 | — | — |
During the hours of the Asian trading session on Wednesday, the Australia 200 Index will be trying to find some more support from the 5400 level and look to rally higher and return to above 5500 again. 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 5600 in September.
Further levels in both directions:
• Below: 5340 and 5100.
• Above: 5650.
Economic Releases
- 00:30 AU Construction Work Done (Q3)
- 09:30 UK GDP (2nd Est.) (Q3)
- 09:30 UK Index of Services (Sep)
- 13:30 US Core PCE Price Index (Oct)
- 13:30 US Durable goods orders (Oct)
- 13:30 US Durables ex transport (Oct)
- 13:30 US Initial Claims (22/11/2014)
- 13:30 US Personal Income & Spending (Oct)
- 14:45 US Chicago PMI (Nov)
- 14:55 US Univ of Mich Sent. (Final) (Nov)
- 15:00 US New Home Sales (Oct)
- 15:00 US Pending Home Sales (Oct)