ASX 200 Technical Analysis Talking Points:
- The ASX 200 is back in the range of its last major peak, that made in September, 2018
- Its uptrend channel looks solid too, if perhaps a little overextended
- Still, bulls can probably hope for more upside
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Fundamentally speaking the ASX 200 continues to reap the benefits of resilient global risk appetite and, perhaps as importantly, a rethink on global interest rate rises which sees lower base rates and investors hungry for better yields in assets such as stocks.
Technically, the Australian equity benchmark remains in its medium-term uptrend. This dogged rise has taken it up more than 1000 points from this year’s lows and back into the daily-chart range which pertained at the peaks of last year.
These were also the highest levels since the pre-crisis days of 2007. Closer in, the index is right in the middle of the uptrend channel which has pertained since February 4 and which is, in itself, only an extension of the broad climb up from those 2019 lows.
That channel suggests that immediate near-term support comes in at the channel base of 6150, with another possible prop above it, at the bottom of that trading range from September last year. That comes in at 6200.
It is notable however that the index is looking perhaps a little overextended to the upside now, with even the first, 23.6% Fibonacci retracement of this year’s rise quite far below the market at 6088. It’s possible that we will see some consolidation in the days and weeks ahead but, even if we do, this need not be bad news for the bulls, as long as it doesn’t get to far from there.
It’s important to remember that the 6000 level is the psychological key to this index with forays above usually measurable in months at very best. For now. the ASX seems quite comfortable well above it, but the closer it gets on any consolidation the more fragile gains are likely to be.
For now, the channel is probably best played, albeit with protection in place below that 6088 point.
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— Written by David Cottle, DailyFX Research
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