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The S&P/ASX200 Rebound Could Appeal To Bears; JBH, GXY Update

ByCity Index
AuthorMatt Simpson
Published 10/08/2019, 03:47 AM
AXJO
-2.44%
JBH
-2.94%
GXY
0.00%

The S&P/ASX 200 is on track for its third consecutive bullish session. Yet this may not be enough to keep bears at bay, given the depth of the prior decline.

S&P/ASX 200 Index Daily Chart

  • Last week we outlined the potential for ASX200 to mean revert on the weekly charts and Wednesday’s -2.3% decline only reaffirms this view. Now trapped between the 50 and 200-day eMA’s, bears have made a half-hearted attempt to lift the index from its lows – which is something bearish swing traders would be prudent to keep a close eye on.

    We remain bearish below 6,600, the 50-day eMA sits between the 50% and 61.8% retracement levels to provide an additional zone of resistance.

  • From here, we’d like to see a bearish candle such as a hammer or 20bar reversal pattern to suggest the swing high is in.

  • The 6,475.4 low is the initial target ahead of 6,400 where the 200-day eMA and August low reside.

  • A break above 6,600 invalidates the bearish bias.
    • JB Hi-Fi Ltd Daily Chart

    JB Hi-Fi (ASX:JBH) has been a strong performer this year, rallying nearly 75% since January’s low. Prior resistance around 33024 has been confirmed as support and acted as a springboard ahead of its breakout from a bull flag. It closed to record highs so there is potential for over-extension over the near-term, but it is difficult to argue with the bullish trend.

  • The trend remains bullish above 33.24, so traders who prefer to buy the dip could seek bullish setups above this key level

  • Intraday bulls could wait to see if 35 (prior resistance) holds as support
    • Galaxy Resources Ltd Daily Chart

    Galaxy Resources (ASX:GXY) has been the bearish trend that has kept on giving. The market topped in January 2018 and has been in a steep decline ever since. Now trading at its lowest level since March 2016, we’re seeing the potential for a short and for it to head towards the Feb 2016 low.

  • The daily trend remains bearish below 1.18, although there’s the potential for mean reversion given RSI dipped into oversold yesterday and prices closed beneath their lower Keltner band for a third consecutive session.

  • Bears could consider fading into minor rallies below the 1.00 – 1.05 area, or wait for bearish reversal candles (such a hammers, pinbars or 2-bar reversals etc) to form below 1.05, before assuming a swing high in in place.

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