Technicals | Jul 03 2017
By Craig Parker, asset manager, Moat Capital
Nothing to see here as the struggle between the bulls and bears rages on. On the daily chart, the ASX200 has been stuck between the 60-day and 200-day moving average since mid-May, which means we are getting closer to a breakout. To gain a better insight as to the direction of a possible breakout we can also look at the weekly chart which is still holding onto the head and shoulders pattern. A breakout down below the neckline is getting closer to a reality and a move down between the 5500 and 5600 levels.
In saying this I would also be keeping an eye out around the 200-day moving average for possible support although, I wouldn’t be getting my hopes up. The A-REIT monthly chart isn’t looking great at all with a break below the head and shoulders pattern. Expectations of higher rates on the horizon perhaps. Not great news for consumer spending if this is the case. Looking abroad and even though the US market continues to shrug off the Trump controversy and the expectation of higher rates it is looking weaker in the short term with the weekly chart illustrating some clear bearish RSI divergence. The uptrend can only go on for so long before a meaningful correction must happen. Something else to look out for is our volatility index which jumped 13% on Friday and is nearing a resistance level. A break through this level and down we go.
Authorised Representative Sentinel Private Wealth AFSL 344762
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