Australia 200 for Monday, May 26, 2014
Over the last month or so, the Australia 200 Index has formed an attraction to the key 5500 level as it spent a considerable amount of time trading around it. During the course of last week, 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. Throughout the last few weeks it has been placing ongoing pressure on the resistance level at 5500 and a couple of weeks ago it was finally able to move through it to a three week high before easing back again to this key level. Several weeks ago it slowly but surely eased away from its multi-year high achieved near 5560, however the following week it fell reasonably sharply and started looking towards the 5400 level, which is near where it currently sits. In doing so, it returned back under the key 5500 level which has provided some reasonable resistance over the last few months.
For the bulk of the last few months, the Australia 200 Index has traded roughly between 5300 and 5500; therefore, its return to back under 5500 was not surprising. The index has done well over the last couple of months to move steadily higher from support around 5300 up to beyond 5500, forming higher peaks and higher troughs along the way. The support level at 5300 may also be called upon should the index fall lower and will also likely play a role in providing some buffer from any decline. Since February, most of the trading activity has occured between 5400 and 5500, therefore the former level may also be called upon to prop up prices. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.
Consumer confidence has tumbled to its lowest level in nearly three years after the Federal Government's budget. Westpac (ASX:WBC) and the Melbourne Institute's long-running and widely watched survey of consumer sentiment dropped 6.8 per cent between April and May to a reading of 92.9, solidly below the 100-point level where optimists equal pessimists. However, the national gloom over the nation's key financial document is far from unprecedented, with last year's budget eliciting a virtually identical 7 per cent fall in confidence, albeit from a slightly higher starting point. Unlike last year's budget though, where almost half the respondents expected no effect on their family finances over the next year, almost 60 per cent expect the first budget from the Coalition to make them worse off, with only 3.1 per cent expecting to be better off. Westpac's chief economist Bill Evans says it will take another month or two to ascertain whether the budget has a lasting impact on confidence.
Australia 200 May 26 at 02:40 GMT 5521 H: 5526 L: 5514
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5400 | 5300 | 5000 | 5500 | --- | --- |
During the hours of the Asian trading session on Monday, the Australia 200 Index is trying to edge higher and move away from the key 5500 level after recently experiencing a strong fall down to support near 5400 and a subsequent return back to 5500. 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 few weeks.
Further levels in both directions:
• Below: 5400, 5300 and 5000.
• Above: 5500.
Economic Releases
- 06:00 UK Nationwide House Prices (26th-30th) (May)
- JP BoJ release minutes