asx 200 short term technical outlook final potential push down towards 53305300 support before recov

Wed, 26 October 2016

(Click to enlarge chart)

What happened earlier/yesterday

The Australia 200 Index (proxy for the ASX 200 futures) has staged a bearish breakdown below the 5380 medium-term pivotal support reinforced by a better than expected Australian  Q3 CPI data (1.3% y/y & 0.7% q/q versus 1.1% y/y & 0.4% q/q).

Please click on this link for a recap on our latest weekly technical outlook for major stock indices.

Key elements

• The next support will be at the 5330/5300. This is a significant support zone which is defined by the lower boundary of a medium-term bullish ascending channel in place since 10 February 2016 low and a Fibonacci cluster.
• The hourly Stochastic oscillator is now hovering at an extreme oversold level which indicates that a minor rebound is likely to occur at this juncture.
• The key short-term resistance stands at 5380/5390

Key levels (1 to 3 days)

Intermediate resistance: 5380

Pivot (key resistance): 5390

Supports: 5330 & 5300

Next resistance: 5460

Conclusion

Turn bearish in short-term within a medium-term bullish trend. After a steep down move, the Index may see a minor rebound first towards the intermediate resistance at 5380 with a maximum limit set at the 5390 short-term pivotal resistance before another downleg occurs to target the 5330 and 5300 significant medium-term supports.

However, a break above the 5390 short-term pivotal resistance is likely to invalidate the last push down scenario for a recovery towards the next resistance at 5460 in the first step.

Charts are from City Index Advantage TraderPro

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