Australia 200 - Drops Sharply To Support At 5400

Includes: FXA
by: Dean Popplewell

By Stuart McPhee

Australia 200 for Friday, June 13, 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. 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 occurred 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.

Australia’s unemployment rate was steady at 5.8 percent in May, official figures show. The total number of people with jobs fell 4,800 to 11.565 million in May, according to seasonally adjusted figures from the Australian Bureau of Statistics on Thursday. The unemployment rate was expected to reach 5.9 percent in May, with 10,000 jobs added to the economy, according to an AAP survey of 13 economists. Full-time employment rose 22,200 to 8.068 million in May and part-time employment was down 27,000 to 3.496 million. The participation rate — those that have a job, are looking for work or are ready to start work — fell to 64.6 percent, from 64.7 percent in April.

(Daily chart below)

Australia 200 June 13 at 01:25 GMT 5393 H: 5401 L: 5384

Australia 200 Technical

S3 S2 S1 R1 R2 R3
5400 5300 5000 5550 --- ---

During the hours of the Asian trading session on Friday, the Australia 200 Index is trying to hold onto the 5400 level after falling heavily back down to there over the last couple of days. 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.

Economic Releases

  • 04:30 JP Capacity Utilisation (Apr)
  • 04:30 JP Industrial Production (Final) (Apr)
  • 09:00 EU Employment (Q1)
  • 09:00 EU Trade Balance (Apr)
  • 12:30 CA Manufacturing sales (Apr)
  • 12:30 US PPI (May)
  • 13:55 US Univ of Mich Sent. (Prelim.) (Jun)
  • JP BoJ MPC - Overnight Rate (Jun)

*All release times are GMT

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