Australia 200 for Wednesday, June 18, 2014
Over the last couple of weeks the Australian 200 Index has fallen back and broken back down through the key 5500 level towards a four week low around 5400 where it has found some support over recent days. It moved lower strongly to finish out last week and will now look at the support level at 5400 to provide some assistance in rallying back to the key 5500 level. In the couple of weeks prior it moved back and forth between the two key levels of 5500 and 5550 before the recent fall. Over the last couple of months the Australia 200 Index has formed an amazing attraction to the key 5500 level as it spent a considerable amount of time trading around it. A couple of weeks ago, the index fell away heavily back down to support around 5400 before returning to the key 5500 level just as quickly, as if gravity had pulled it back.
Throughout the last few weeks it has been placing ongoing pressure on the resistance level at 5500 and a few weeks ago it was finally able to move through to a three week high before easing back again to this key level. Several weeks ago it slowly but surely eased away from its multi-year high achieved near 5560 however the following week it fell reasonably sharply and started looking towards the 5400 level which is near where it currently sits. In doing so it returned to back under the key 5500 level which has provided some reasonable resistance over the last few months.
For the bulk of the last few months, the Australia 200 Index has traded roughly between 5300 and 5500 therefore its return to back under 5500 was not surprising. The index has done well over the last couple of months to move steadily higher from support around 5300 up to beyond 5500, forming higher peaks and higher troughs along the way. The support level at 5300 may also be called upon should the index fall lower and will also likely play a role in providing some buffer from any decline. Since February, most of the trading activity has occured between 5400 and 5500 therefore the former level may also be called upon to prop up prices. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.
The RBA Minutes were released yesterday. Australian borrowers can rest assured that interest rates won’t be going anywhere in the foreseeable future. The cash rate remained on hold earlier this month at its record low of 2.5 per cent, where it has been since August last year. At its June meeting, the Reserve Bank of Australia board said it would be prudent to leave rates unchanged, with no indication of any movement in the near future. “Given this outlook for the economy and the significant degree of monetary stimulus already in place to support economic activity, the board judged that the current accommodative stance of policy was likely to be appropriate for some time yet,” the board said in the minutes of the meeting, released on Tuesday. Low interest rates were working to support demand but it was hard to judge whether that would offset the effects of the tough federal budget and expected declines in mining investment, the board said. “Those uncertainties were likely to take some time to resolve,” it said.
(Daily chart below)
Australia 200 June 18 at 00:40 GMT 5396 H: 5396 L: 5396
Australia 200 Technical
During the hours of the Asian trading session on Wednesday, the Australia 200 Index will again be trying to rally and use the support from the 5400 level after falling heavily back down to there over the last few days to finish out last week. For most of this year the Australia 200 Index has moved well from the lower support level at 5000 up to the multi-year highs above 5500 in the last month or so.
Further levels in both directions:
• Below: 5400, 5300 and 5000.
• Above: 5550.
- 23:50 (Tue) JP Customs Cleared Trade (May)
- 00:30 AU Westpac-MI Leading Index (May)1
- 12:30 CA Wholesale Sales (Apr)
- 12:30 US Current Account (Q1)
- 18:00 US FOMC – Fed Funds Rate (Jun)
- 18:30 US Fed Chair holds press conference following FOMC meeting on interest rate policy
- EU General Council meeting of the ECB in Frankfurt
- UK BoE MPC minutes released
- JP BoJ release minutes
*All release times are GMT
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