Featured Trade: ASX 200 at risk of bearish breakdown from medium term uptrend

ASX 200 medium-term uptrend at risk.

Short-term technical outlook Australia 200 Index (Fri, 24 Aug)



Key technical elements

  • The on-going medium-term uptrend of the Australia 200 Index (proxy for the ASX 200 futures) in place since 04 Apr 2018 low of 5701 is now at risk of breaking down after a test and retreat from the 6380 upper limit of the medium-term neutrality range on 17 Aug 2018, U.S. session. Click here for a recap of our latest weekly technical outlook.
  • Current price action has started to exhibit bearish elements; the Index has broken below the medium-term ascending channel support from 04 Apr 2018 now turns pull-back resistance at 6285 when also confluences with the upper boundary of the minor descending channel in place since 17 Aug 2018 (see daily & hourly chart).
  • The Index has also traced out a minor bearish reversal “Head & Shoulders” configuration in place since 09 Aug 2018 with the neckline support at 6230 that confluences closely with the  23.6% Fibonacci retracement of the up move from 04 Apr 2018 low to 17 Aug 2018 U.S. session high of 6380.
  • The significant short-term supports are at 6183 followed by 6150 (the former medium-term swing high areas of 10 Jan/ 10 May 2018, a Fibonacci retracement/projection cluster and the exit potential of the impending minor bearish reversal “Head & Shoulders” breakdown.
  • The daily RSI oscillator is now attempting to stage a bearish breakdown from its corresponding significant support at the 50% level. These observations suggest a potential reversal in medium-term momentum from positive to negative.

Key Levels (1 to 3 days)

Intermediate resistance: 6264

Pivot (key resistance): 6285

Supports: 6230, 6183 & 6150/140

Next resistance: 6325/335

Conclusion

Therefore, as long as the 6285 short-term pivotal resistance is not surpassed and a break below 6230 is likely to add impetus for a further potential push down to target the next near-term supports at 6183 and 6150/140 in the first step.

On the other hand, a clearance above 6285 negates the bearish tone for a continuation of the corrective rebound to retest the next resistance at 6325/335 (former minor swing high area of 15 Aug 2018 & 61.8% Fibonacci retracement of the on-going decline from 17 Aug 2018 high to today, 24 Aug 2018 current intraday low of 6235.

Charts are from City Index Advantage TraderPro



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