Although the major US indices are balancing near their all-time highs, the Australian index is struggling to get back to its recent highs, which were reached in the beginning of this month. So far, the index is flirting with the 6640 hurdle, which is near the lows of July 1st, 2nd, 9th and 15th. At the same time, the price is trading below a short-term downside resistance line taken from the high of July 5th. For now, it seems that everything is leaning towards the downside, but before we could examine lower levels, we need to see a clear break below the above-mentioned support area.
A price-drop below the 6640 hurdle, would confirm a forthcoming lower low on the shorter timeframe and could open the door to a further slide to the 6617 support zone. That zone held the index from moving lower between June 21st and June 28th. It may help hold the index up again and the price could correct slightly to the upside. That said, if ASX 200 struggles to travel back above the 6640 barrier, we may see another leg of selling. A break of the 6617 obstacle and a push below the 200 EMA, this could invite more sellers into the game and lead the Australian index to the 6570 support area, which between June 13th and 18th acted as a temporary resistance zone.
Alternatively, if ASX 200 climbs higher, moves above the 6685 barrier and breaks the aforementioned short-term downside line, this might interest more buyers to join in and potentially drive the index further north. We will then examine the next resistance area between the 6722 and 6736 levels, marked by the high of July 12th and 11th respectively. This is where the price might stall for a bit, or even retrace slightly lower. But if the index remains above the previously-mentioned downside line, we will class any move down, as a small correction, before another leg of buying. If this time that resistance area is no-match for the buyers, its break could lift the price to the 6776 level, marked by the high of July 5th.
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