ASX 200 is still looking shaky

May 21, 2015

The ASX 200 is one of the softer performing major equity markets in Asia this year, with the Index only rising around 4.5% since the beginning of the year. This is largely due to a sell-off this month that has seen the Index lose around 2.3% of its value as it sunk below an important support level around 5,750/5,800. The ASX 200 even dipped below 5,600 yesterday for the first time since early February, but bargain hunters stepped in and a strong performance from health stocks helped the Index regain its footing above this important support level.

There are some indications that the Index may be establishing a near-term bottom around 5,600; RSI points to a period of consolidation and price bounced off its 50% fib retracement level from December’s low. In saying that, the Index will have to breakout of its medium-term downward trend before getting overly bullish. Lately, bargain hunters have been fighting profiting takers in resource stocks that are suffering from softer commodity prices, although the materials sector has recovered some ground today.

Levels to watch:

• There’s some support around 5,575-5,600

• Beyond there, we’re eyeing 5,475 and then 5,400

• 5,125 – 2015’s low

If price breaks out of its current downward trend it would negate our technical bearish view as it may encourage some bulls to join the party, in which case we may see price re-test resistance around 5,750 and then 5,800.

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