Australia 200 – Eases Away in Reaching for Key 5400 Level 

Australia 200 for Thursday, October 23, 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 and to an eight month low around 5120 a couple of weeks ago. It has however enjoyed a solid resurgence over the last week or so after getting much needed support from the 5200 level and it is now within reach of getting back within the previous range above 5400, despite easing off in the last day. Earlier last week it received solid support from the 5100 level which saw it rally well in the last few days to close out last week. Several 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. Up until recently, the 5400 level had done well and propped up price to keep it within the range.

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 price of Australian consumer goods and services rose 0.5 per cent in the September quarter. The consumer price index (CPI), a key measure of inflation, rose 2.3 per cent in the year to September, the Australian Bureau of Statistics said on Wednesday. The headline CPI was expected to rise by 0.4 per cent in the December quarter for an annual rate of 2.2 per cent, according to an AAP survey of 13 economists. The ABS said seasonally adjusted CPI rose 0.1 per cent in the September quarter, and was up 2.2 per cent in the 12 months to September. The ABS calculates the trimmed mean and weighted median measures on behalf of the Reserve Bank of Australia, which uses them to gauge the underlying trend in inflation. The trimmed mean CPI rose 0.4 per cent in the September quarter, for an annual growth rate of 2.5 per cent. The weighted median CPI rose 0.6 per cent in the September quarter, for an annual rise of 2.6 per cent. The RBA has a target range for annual inflation of two to three per cent, and the latest figures could influence the central bank’s interest rate decisions in the coming year.

(Daily chart below)

 

 

Australia 200 October 22 at 23:05 GMT 5343 H: 5343 L: 5343

Australia 200 Technical

During the hours of the Asian trading session on Thursday, the Australia 200 Index is going to try to continue to rally higher and get back above the key 5400 level, after recently breaking through the 5200 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: 5100.

• Above: 5500 and 5650.

Economic Releases

• 21:45 (Wed) NZ Trade Balance (Sep)
• 08:00 EU Flash Manufacturing/ Services/Composite PMI (Oct)
• 08:30 UK BBA Mortgage Approvals (Sep)
• 08:30 UK Retail Sales (Sep)
• 12:30 US Initial Claims (18/10/2014)
• 13:00 US FHFA House Price Index (Aug)
• 13:45 US Flash Manufacturing PMI (Oct)
• 14:00 EU Flash Consumer Sentiment (Oct)
• 14:00 US Leading Indicator (Sep)
• EU EU Leaders Hold Summit in Brussels (to 24th)

* 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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