Australia 200 – Eyes Back on 5800

Australia 200 for Friday, May 15, 2015

The Australia 200 index has been meeting resistance at the 5650 level to start this week however in the last couple of days it has been able to move through and it will now be looking to get some support from this level as it has eyes back on the 5800 level.  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. 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, and 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.

The threat of early elections has driven Australia’s ruling conservative government to cater the budget to its core constituencies, small businesses and middle class families with children, at the expense of structural reforms, analysts said. “It looks like an election budget – the government has substantially spent on this budget and pushed off returning to a surplus into the distance,” University of Sydney’s lecturer in politics & public policy, Peter Chen, told CNBC. “This is not an economists’ budget but a political budget…and all the major provisions are aimed at the coalition’s base.” For more than a decade, Australia’s economy has been fuelled by a mining boom – but a collapse in commodity prices is slowing economic growth and reducing tax receipts.

(Daily chart below)

Australia 200 May 15 at 00:20 GMT   5726   H: 5730   L: 5658

Australia 200 Technical

S3

S2

S1

R1

R2

R3

5650

5550

5400

5800

6000

—

During the hours of the Asian trading session on Friday, the Australia 200 Index will be looking to continue to rally and stay above the 5650 level and move back towards 5800.

Further levels in both directions:

• Below: 5650, 5500 and 5400.

• Above: 5800 and 6000.

Economic Releases

05:00 JP Consumer Confidence (Apr)

08:30 UK Construction Output (sa) (Mar)

12:30 CA Manufacturing sales (Mar)

12:30 US Empire State Survey (May)

13:15 US Capacity utilisation (Apr)

13:15 US Industrial production (Apr)

14:00 US Univ of Mich Sent. (Prelim.) (May)

20:00 US Net Long-term TICS Flows (Mar)

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.