Australia 200 for Wednesday, January 28, 2015
In the last week or so the Australian 200 index has done well and surged higher to move back above the key 5400 level to a two month high just above the resistance level at 5500. This move 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.
Amid calls for the Reserve Bank of Australia to cut interest rates, it’s a good idea to be clear just what problem it might be trying to solve by doing it. After all, taking the wrong medicine can make the disease worse. One ailment that’s being talked about a lot these days is deflation. And there’s no doubt that deflation – falling prices – can be very bad news. Most economists expect a small rise in the consumer price index, to be reported by the Australian Bureau of Statistics on Wednesday. But NAB’s economics team expects a fall of 0.1 per cent for the December quarter thanks largely to falling petrol prices in the wake of slumping crude oil prices. But that’s not deflation, as NAB economists Ivan Colhoun and Peter Jolly were at pains to point out in a report on Tuesday, but “negative inflation” – a dip interrupting a rising trend in prices. “It’s an important distinction: deflation is a persistent trend of falling prices, leading to delays in spending, weaker economic growth, higher unemployment and further falls in prices,” they said. True deflation can be a symptom of chronic economic weakness, with prices falling amid a lack of demand, leading in turn to unemployment, falling investment – and even more deflation. That’s not what the economy is facing now. “We think the decline in oil is mostly supply-side driven rather than demand-driven,” they said.
Australia 200 January 27 at 22:20 GMT 5493 H: 5524 L: 5463
Australia 200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5400 | 5150 | 5100 | 5500 | — | — |
During the hours of the Asian trading session on Wednesday, the Australia 200 Index will be trying to maintain price above the key 5400 level after surging higher in the last week or so and make another run at the resistance at 5500.
Further levels in both directions:
• Below: 5400, 5150 and 5100.
• Above: 5500.
Economic Releases
- 20:00 (Tue) NZ RBNZ – Cash Rate
- 21:45 (Tue) NZ Trade Balance (Dec)
- 23:50 (Tue) JP Large Retailer Sales (Dec)
- 23:50 (Tue) JP Retail Sales (Dec)
- 00:00 AU Skilled Vacancies (Dec)
- 00:30 AU CPI (Q4)
- UK Nationwide House Prices (28th-2nd) (Jan)