Technicals | Jun 26 2017
By Craig Parker, asset manager, Moat Capital
The 60-day moving average was a barrier too far this week and we are now in no man’s land stuck between the opposing forces of the 60-day moving average and the 200-day moving average. There is possibly some support forming around the 5680 level although I did say that about the 5730 level as well and time will tell whether this is to be a valid support level, I doubt it. The daily chart does have some bullish divergence on the RSI in its favour and suggests a short-term recovery is likely. If this is the case I would still be looking at the 60-day moving average for some resistance and any break of the 200-day moving average could spell further moves down towards the 5500 levels as mentioned in last week’s update.
On the weekly chart, the shoulder on the head and shoulders pattern is still forming and a break below the short-term uptrend line would be negative for the overall market. One of the main drivers of our overall market the Financials sector is teetering below the 200-day moving average and has another 200 points or so before it hits any kind of possible support. Our volatility index has just peeped above a long term down trend line and looks to be entering a possible short-term uptrend which isn’t great news.
Looking to the US and the Dow Jones Industrial average looks to be rolling over with a crossover likely on the MACD indicator which could possibly mean further downward pressure on our market. On a positive note for us China seemed to find some support and has moved into a short-term uptrend which could help us in the short term and hopefully in the medium to long term. Overall the technical factors are very mixed and leaning towards negative sentiment over the medium term. The bulls and bears are going to be arm wrestling it out. In the short-term there might be a possible recovery but some key levels need to be broken to the upside before I would be calling this downtrend anywhere near over.
ASX200 daily
ASX200 weekly
ASX200 financials ex-REITs daily
Dow Jones daily
Shanghai Composite weekly
ASX200 VIX volatility weekly
Authorised Representative Sentinel Private Wealth AFSL 344762
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