Market News & Analysis

Featured Trade: ASX 200 looking precarious

Short-term technical outlook on ASX 200/ Australia 200 Index (Thurs 21 Mar)



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Key technical elements

  • Since its 06 Mar 2019 high of 6288, the Australia 200 Index (proxy for the ASX 200 futures) has continued to slide. Recent price action has staged a bearish breakdown from a minor range configuration support from 13 Mar 2019 low now acting as a key short-term resistance at 6185 (see 1-hour chart).
  • Current price action of the Index has started to form a bearish reversal “Head & Shoulders” configuration after failure to clear above the 6290 key long-term pivotal resistance as per highlighted earlier in our latest weekly technical outlook report published on Mon (click here for a recap).
  • The neckline support of the “Head & Shoulders” rests at 6126.
  • The daily RSI oscillator has dipped below its 50 level after a prior bearish divergence signal seen at its overbought region which indicates that medium-term upside momentum of the on-going rebound in price action from 23 Dec 2018 low has started to wane.
  • The next significant near-term support rests at 6080/6060 which is defined by the lower boundary of a minor descending channel from 06 Mar 2019 high, minor swing low areas of 20/21 Feb 2019 & 1.00 Fibonacci expansion of the on-going slide from 06 Mar 2019 high to 13 Mar 2019 minor swing low projected from 19 Mar 2019 U.S session high).

Key Levels (1 to 3 days)

Intermediate resistance: 6155

Pivot (key resistance): 6185

Supports: 6126 & 6080/60

Next resistance: 6230

Conclusion

The hourly Stochastic oscillator has almost reached an extreme oversold level. Thus, the Index may shape a minor bounce first towards the 6155 intermediate resistance. If the 6185 key short-term pivotal resistance is not surpassed and a break below 6126 is likely to reinforce a potential downleg to target the next support at 6080/60 in the first step.

On the flipside, a break above 6185 negates the bearish tone for a corrective rebound to retest the minor range resistance at 6230.

Charts are from City Index Advantage TraderPro



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