Australia 200 for Monday, May 11, 2015
The last few days to finish last week saw significant declines in the Australia 200 index, which has resulted in it reaching a three month low just below 5550. After making another solid run at the key 6000 level a couple of weeks ago but again being forced back by overwhelming supply at that level, the Australian 200 index dropped sharply to move through the 5800 level down to a two month low below 5750, before rallying well to finish out that week. It has since reversed again and looks threatening to remain below 5800. Several weeks ago, the Australia 200 index showed some positive signs and moved well towards the resistance at 6000, before finishing the week strongly lower. Previously, the Australia 200 index pushed higher to a multi-year high to just above the key resistance level at 6000, before easing lower throughout the last couple of weeks to below 5900.
Back in mid-March, the ASX200 index found some support at the key 5800 level which has propped it up and allowed it to rally a little and move higher, and of course it will be hoping to receive the same again. Back in early March, the ASX200 index reversed from its highs near 6000 and started to establish a new medium term down trend before rallying higher a couple of weeks ago. It enjoyed a strong move higher throughout February, moving from below the key 5800 level up to another multi-year high near 6000, where it met stiff resistance. At the beginning of February, 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. This level has resumed its key role and is currently having an impact on the index.
Throughout the second half of January, the Australian 200 index did very well, and surged higher to move back above the key 5400 level and push on through to the new highs. At this time, the resistance at 5500 stood tall and fended off all advances; however this now been broken strongly through. 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.
Australia’s central bank lowered its growth forecast, predicted higher unemployment, and said it was prepared to adjust policy if needed as business spending fails to fire and China struggles with an economic transition. “The board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand,” the Reserve Bank of Australia said Friday in its quarterly monetary policy statement in Sydney. “Growth in the Australian economy is expected to continue at a below-average pace for a little longer than earlier anticipated.” Governor Glenn Stevens and his board cut interest rates to a fresh record of 2 percent on May 5 and said the reduction would “reinforce recent encouraging trends in household demand.” That positive comment and the lack of any indication that it could cut further fostered predictions the easing cycle had ended.
(Daily chart below)
Australia 200 May 11 at 00:35 GMT 5647 H: 5661 L: 5592
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5550 | 5400 | — | 5650 | 6000 | — |
During the hours of the Asian trading session on Monday, the Australia 200 Index will be looking to reverse and repair some of the damage from its recent strong falls.
Further levels in both directions:
• Below: 5500 and 5400.
• Above: 5650 and 6000.
Economic Releases
- 01:30 AU NAB Business Conditions & Confidence (Apr)
- 11:00 UK BoE MPC – APF Total (May)
- 11:00 UK BoE MPC – Base Rate
- 11:00 UK BoE Monetary Policy Committee meeting and rate decision