asx 200 further potential upside backed by materials stocks 1837552016

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Intermediate support: 5530

Pivot (key support): 5280

Resistances: 5460 & 5570/5610

Next supports: 5148 & 5040

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) has staged a strong rebound from the long-term ascending channel support at 5148 in place since March 2009 (see weekly chart).

The Index has also reintegrated back above the lower boundary of the medium-term ascending channel in place since 10 February 2016 low which suggests that the decline seen two weeks ago can be considered as a “bear trap” – failure breakdown.

Technical elements have turned positive, thus as long as the 5280 medium-term pivotal support holds, the Index is likely to see a further potential push up to test the descending trendline in place since 01 August 2016 high now at 5460. The bulls need to clear the 5460 “hurdle” in order to open up scope for a further rally to target the next resistance zone of 5570/5610.

However, failure to hold above the 5280 medium-term pivotal support may invalidate the preferred bullish bias for another round of choppy decline to retest the 04 November 2016 swing low area of 5148.

Charts are from City Index Advantage TraderPro & eSignal as at Thurs, 10 Nov 2016

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