Yesterday, even though the Australian index closed in the positive territory, still, it failed to get back to last week’s high, at 6289.00. Instead, the index just formed a lower high and today it closed slightly in the negative zone. Looking at the ASX200 cash index, we can see that it is currently balancing near its key area of support, at 6160.50. For now, we will remain cautiously-bearish and continue aiming slightly lower.
If the above-discussed level, at 6160.50, fails to withhold the bear-pressure, a break would confirm a forthcoming lower low and we may see the price sliding further south, where the next potential area of support could be near the 6105.00 hurdle, marked by the low of February 25th. Just a few points lower, at 6078.00, lies another key area of support (the low of February 19th), which also could come into play, if the price-depreciation doesn’t stop. Of course, at some point we could see a small rebound, but if the index fails to get back above the 6160.50 barrier, the bears might re-enter the field and drive ASX200 back down again. If this time the 6078.00 support zone fails to hold, then a break below could drive the index towards the 6038.00 obstacle, marked by the low of February 14th.
Looking at our oscillators, the RSI and the MACD, both seem to be in support of the above-mentioned scenario. The RSI, after topping last week, has moved towards 50 and keeps pointing lower. The MACD has now moved lower and shifted below its trigger line by continuously pointing to the downside, even though it is still above zero.
Alternatively, if ASX200 reverses and pushes above the 6225.00 barrier, this might invite more buyers, who in their case could lift the price back up to last week’s high, at 6289.00. If they remain strong and continue pushing the index higher, past 6289.00 level, this would confirm a forthcoming higher high. Such a move may clear the way to the 6340.00 hurdle, marked by the inside swing low of August 30th.
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