- Index quickly bounced after seemingly finding support at 5,100
- The ASX 200 might see further weakness if 5,200 acts as resistance
- A break below 5,100 could potentially expose the 5,000 level
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The ASX 200 appears to have found some support after six consecutive days of declines. The index blasted through support at 5,300 and 5,200 before quickly rejecting higher from the 5,100 level to close above its 200 day SMA.
The Index has been trading for the past months in a well-defined range between the 5,380 resistance and the 4,750 support, which coincided with the 0.618 Fib level of the long term up trend from 2012.
The move to the downside seemed to have been initiated following a failed break to the topside after forming a "bearish engulfing" pattern on the 5,380 resistance.
At this stage, it looks like the index might test the 5,200 level which could cap gains on a "support turned resistance" basis. If that's the case there might be further weakness ahead, but further momentum may need to see a clear break and a push away from the 5,100 support and the 200 day SMA.
A move below 5,100 could potentially put the spotlight on a possible support at the 5,000 handle, followed by the 4,900 prior support. The big range lows between 4,800-4,750 might be a big hurdle as well if the index continues to the Southside.
With that said, if price manages to move higher and close above 5,200 this may expose the 5,300 resistance. A clear break above might put the focus again the long term range top at 5,380.
ASX 200 Daily Chart : June 17, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To cont act Oded Shimoni, e-mail email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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