Technicals | Jun 19 2017
By Craig Parker, asset manager, Moat Capital
The 200-day moving average as touched on last week happened to provide some much-needed support for the ASX200. How long it lasts is anyone’s guess as we now have some resistance at the 60-day moving average kicking in. Assuming these averages converge we may see some sideways action over the coming weeks as the bulls and bears fight it out. Worryingly on the weekly chart there seems to be a classic head and shoulders pattern forming which can be very negative if the short-term uptrend line is broken. The pattern is not fully formed yet however if there is a confirmed peak lower than the previous then I would be very concerned for the medium-term outlook.
The monthly chart is also around uptrend lines and as per the weekly chart if this line is broken then the next level of support is around the 5500 level. The US market (S&P 500) is now illustrating RSI bearish divergence on both the daily and weekly charts so this does not bode well in the short to medium term and with the Trump investigation continuing to develop momentum this could exacerbate any uncertainty. So far, the market has shrugged the controversy off but if there happens to be a smoking gun watch out for the market to react and not in a good way. For the bulls on the plus side over the short term the Financials sector looks to be attempting a counter trend even though it is now in a confirmed down trend with a lower low than the previous and the Gold sector seems to be weakening further. In the coming weeks, I would be watching the levels mentioned above closely and if the market does happen to move around the 5500 level then this could provide a good opportunity from a technical standpoint.
ASX200 daily
ASX200 weekly
ASX200 monthly
ASX200 Financials ex-REITs weekly
S&P500 weekly
Gold weekly
Authorised Representative Sentinel Private Wealth AFSL 344762
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