Australia 200: Moves Through To New Multi-Year High Near 6000

Australian 200 for Tuesday, March 3, 2015

The Australia 200 index just continues on its merry way steadily moving higher above the key 5800 level to reach yet another multi-year high near 6000. In the last month or so the Australian 200 index has done very well and surged higher to move back above the key 5400 level and push on through to the new highs. Over the last couple of weeks it has spent some time consolidating around the 5900 level, while the support from 5800 is not that far away. It recently retreated however found solid support at the current key level of 5800 which has propped it up and moved it to the new high. In the couple of weeks leading up to the new high, it spent a week or so battling with resistance at the key 5800 level which repeatedly fended off the index, resulting in it easing back a little. Several weeks ago saw the resistance at 5500 stand tall and fend off all advances, however this now been broken strongly through. The recent move higher from below 5300 to above the key level of 5400 is important as it desperately tries to hang on to this important trading range for the index above 5400. In the week prior, the Australia 200 Index eased back again under the 5400 level after making numerous attempts to clear it over the last month, which saw it drop to a three week low below 5250 before its recent surge higher.

The moderate support from around the 5300 level held it up well for a a couple weeks before the surge higher. The short-term resistance level at 5500 has returned and now resumes its role of placing selling pressure on the index. Throughout most of November and December, the Australia 200 Index fell steadily lower down towards support around 5150 and two month lows before rallying back above 5400 again. Over the last few weeks the Australia 200 index has struggled with resistance at 5400 which has forced it lower time and time again. The 5400 level has been a major player for the last 12 months and the index must get back above this level to encourage more buying and bullish sentiment. It enjoyed a solid resurgence throughout October after getting much needed support from the 5200 level, which has resulted in it moving back above the 5400 and 5500 levels, around a two month high.

Throughout most of September the Australia 200 Index 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 few weeks ago. Several weeks ago it received solid support from the 5100 level which saw it rally well to close out a couple of weeks ago. Back in early September 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.

Australia’s central bank will consider cutting interest rates later today to hold down a currency whose resilience threatens to upend any hopes of an economic recovery. Traders are pricing in a 60 percent chance the Reserve Bank of Australia will lower the 2.25 percent cash rate to a record 2 percent, swaps data compiled by Bloomberg show. Eighteen of 29 economists in a Bloomberg News survey predict a cut. RBA board member John Edwards said in a Feb. 17 interview that “an even lower dollar” would be useful as the currency posted its first monthly gain since October. Policy makers are seeking to bring down unemployment from a 12 1/2-year high after business spending slumped in an economy struggling to find new avenues of growth as miners curb expansion. RBA Governor Glenn Stevens’s global counterparts are easing to counter global disinflation, threatening to drive up the Aussie further and hurt domestic industries.

(Daily chart below)

Australia 200 Daily Chart

Australia 200 March 2 at 22:00 GMT 5952 H: 5976 L: 5913

Australia 200 Technical

During the hours of the Asian trading session on Tuesday, the Australia 200 Index will be looking to break through the key 6000 level.

Further levels in both directions:

• Below: 5800, 5400 and 5150.

• Above: 6000.

Economic Releases

• 00:30 AU Building approvals (Jan)
• 00:30 AU Current Account (Q4)
• 00:30 AU Net Exports of GDP (Q4)
• 03:30 AU RBA – Overnight Rate
• 09:30 UK CIPS/Markit Construction PMI (Feb)
• 10:00 EU PPI (Jan)
• 13:30 CA GDP (Dec)
• 13:30 CA Industrial product price index (Jan)
• 13:30 CA Raw Materials Price Index (Jan)
• 15:00 US IBD Consumer Optimism (Mar)
• AU RBA holds interest rate meeting
• US Vehicle Sales (Feb)

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