Australia 200 – Enjoys Solid Support at 5200 

Australia 200 for Thursday, October 9, 2014

Since the beginning 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 below 5200 in the last few days. It has enjoyed solid support from the 5200 level and is trying to rally higher after recently threatening to break through this level for the first time since February 2014. A few 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. It has now fallen sharply to an eight month low below 5200. 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 however this latest has failed as it continued to fall lower.

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 firmly established themselves as significant and now that we have seen a substantial break to one side, momentum has kicked in and seen the index fall strongly lower. 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.

The huge rise in Australian employment in August and the spike in the jobless rate a month earlier didn’t actually happen, and the Australian Bureau of Statistics intends to revise most of it away. The ABS admitted today that there were problems with its July and August employment data. The number of Australians with jobs rose by a whopping 121,000 in August, the largest monthly increase since records began in 1978, the ABS reported last month. Forecasts had centred on a gain of only 10,000. A month earlier the ABS said the unemployment rate jumped to a 12-year high of 6.4 per cent in July, which also surprised economists who were expecting the rate to stay steady at 6 per cent. Doubts were raised about the veracity of the figures at the time they were both released. The figures are adjusted to remove the effect of regular seasonal influences on the data. But the ABS said there was very little evidence of the usual seasonality in the July and August figures, as well as the September figures, which will be released tomorrow. The ABS said it would revise the figures for these months by replacing the reported seasonally adjusted figures with the unadjusted figures.

(Daily chart below)

Australia 200 October 9 at 02:50 GMT 5314 H: 5315 L: 5255

Australia 200 Technical

During the hours of the Asian trading session on Thursday, the Australia 200 Index is continuing its rally higher from the support level around 5200 after recently threatening to break through this level for the first time since February 2014. 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: 5200.

• Above: 5500 and 5650.

Economic Releases

• 23:50 (Wed) JP METI Tertiary activity index (Aug)
• 23:50 (Wed) JP Bank Lending Data (Sep)
• 00:30 AU Unemployment (Sep)
• 11:00 UK BoE MPC – APF Total (Oct)
• 11:00 UK BoE MPC – Base Rate
• 12:30 CA House Price Index (Aug)
• 12:30 US Initial Claims (04/10/2014)
• 14:00 US Wholesale Inventories (Aug)
• NZ REINZ House Price Index (9th-14th) (Sep)

* 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.

Source: marketpulse

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