Australia 200 for Monday, September 29, 2014
For all of September the Australia 200 Index has 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. A couple of weeks ago 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 early last week. It has now fallen sharply to a six month low below 5300 and it hopes to stay in touch with the well established range between 5400 and 5500. Up until recently, the 5400 level had done well and propped up price to keep it within the range. For most of this year when the index has fallen to the 5400 level, it has bottomed out at around 5370 so it will be interesting to see whether this happens again now. All of this was 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.
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. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.
Inflated Australian house prices could take a downwards turn if the belts are tightened on banks’ lending criteria and result in a halt to surging property prices across the country. The Reserve Bank of Australia has sent out a stern warning to Australian property owners that it needs to take measures to control the booming housing market. Sydney and Melbourne property prices have soared in the past 12 months, experiencing the highest price growth of all the states at 16.2 per cent and 11.7 per cent respectively. In the RBA’s biannual Financial Stability Review released this week, it outlined the “housing and mortgage markets are becoming unbalanced” and experts say it’s time for Australians to listen up as they reassess macroprudential policies which limit higher risk lending. RP Data’s senior research analyst Cameron Kusher said the excitement among investors had been difficult to control and they continued to optimise their ability to negatively gear their property investment and pounce on the record low-rate environment.
Australia 200 September 29 at 00:30 GMT 5314 H: 5314 L: 5314
Australia 200 Technical
S3S2S1R1R2R35300——55005650—
During the hours of the Asian trading session on Monday, the Australia 200 Index will be trying to rally higher after falling sharply to near 5300. 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: 5300.
• Above: 5500 and 5650.
Economic Releases
- 21:45 (Sun) NZ Building Permits (Aug)
- 23:05 (Sun) UK GfK Consumer Confidence (Sep)
- 23:30 (Sun) JP Real Household Spending (Aug)
- 23:30 (Sun) JP Unemployment (Aug)
- 23:50 (Sun) JP Industrial Production (Prelim.) (Aug)
- 23:50 (Sun) JP Large Retailers Sales (Aug)
- 23:50 (Sun) JP Retail Sales (Aug)
- 08:30 UK BoE – Mortgage Approvals (Aug)
- 08:30 UK BoE – Net Consumer Credit (Aug)
- 08:30 UK BoE – Secured Lending (Aug)
- 08:30 UK M4 Money Supply (Aug)
- 09:00 EU Business Climate Index (Sep)
- 09:00 EU Consumer Sentiment (Sep)
- 09:00 EU Economic Sentiment (Sep)
- 09:00 EU Industrial Sentiment (Sep)
- 12:30 US Core PCE Price Index (Aug)
- 14:00 US Pending Home Sales (Aug)
- EU EU General Affairs Ministers Hold Meeting in Brussels