chart of the day asx 200 potential downleg to resume 1854592017

Short-term technical outlook on ASX 200 (Thurs, 22 Jun 2017)

(Click to enlarge charts)

What happened earlier/yesterday

The Australia 200 Index (proxy for the ASX 200 futures) had managed to stage a rebound of 1.2% after a horrendous decline of 2% seen on 20 June 2017 in line with the current plunge in oil prices. Interestingly, the recent rebound from 5658 low of 21 June 2017 has reached an inflection zone where the short-term bearish impulsive downleg may resume.

Key technical elements

• The Index continues to evolve within a medium-term descending channel in place since 01 May 2017 high with its upper boundary acting as a resistance at around 5805 which also coincides with the medium-term pivotal resistance (click here for a recap of our weekly technical outlook).
• The significant short-term resistance stands at 5740 which is defined by the former minor ascending support from 08 June 2017 low (depicted in dotted red), the former minor swing low area of 15 June 2017 and the 50% Fibonacci retracement of the recent decline from 19 June 2017 minor swing high to 21 June 2017 low.
• Revival of both medium and short-term downside momentum of price action. The daily RSI oscillator has reintegrated by below its pull-back resistance which has indicated a failure bullish breakout seen on 18 June 2017. In addition, the hourly Stochastic has just exited from its extreme overbought level.
• The next significant support rests at the 5615/5580 zone which is defined by the lower boundary of a long-term ascending channel in place since 10 February 2016 low, the 06 February 2017 swing low area and a Fibonacci cluster (see daily chart).

Key Levels (1 to 3 days)

Pivot (key resistance): 5740

Supports: 5636 & 5615

Next resistance: 5805 (medium-term pivot)

Conclusion

Therefore as long as the 5740 short-term pivotal resistance is not surpassed, the Index is likely to resume its potential bearish impulsive downleg phase of its short-term downtrend in place since 14 June 2017 high to retest 5636( 08 June 2017 minor swing low area) before targeting the next support at 5615.

On the other, a clearance above 5740 may negate the preferred bearish tone for a squeeze up to retest the 5805 medium-term pivotal resistance.

Charts are from City Index Advantage TraderPro

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