Australia 200: Eyes Remain On Resistance Level At 6000

 | Apr 15, 2015 12:48AM ET

Australia 200 for Wednesday, April 15, 2015

Throughout last week the Australian 200 index showed some signs and moved well towards the resistance at 6000 before easing away slightly, however it remains fixed on the level and looks poised to move through it. In the last couple of days it eased away yet again however remains well within reach of this key level. A few weeks ago the Australia 200 index pushed higher to a multi-year high to just above the key resistance level at 6000, before easing lower throughout the last couple of weeks to below 5900. It is receiving ongoing support at 5800, which is helping its latest push towards 6000. The key 6000 level remains firm and a significant obstacle and the index and markets are firmly fixed on it. Several weeks ago the ASX200 index found some support at the key 5800 level which has propped it up and allowed it to rally a little and move higher, and of course it will be hoping to receive the same again. Back in early March the ASX200 index reversed from its highs near 6000 and started to establish a new medium term down trend before rallying higher a couple of weeks ago.

It enjoyed a strong move higher throughout February moving from below the key 5800 level up to another multi-year high near 6000, where it met stiff resistance. At the beginning of February it spent a week or so battling with resistance at the key 5800 level which repeatedly fended off the index, resulting in it easing back a little. This level has resumed its key role and is currently having an impact on the index. Throughout the second half of January the Australian 200 index did very well and surged higher to move back above the key 5400 level and push on through to the new highs. At this time, the resistance at 5500 stood tall and fended off all advances, however this now been broken strongly through.

Throughout most of November and December, the Australia 200 Index fell steadily lower down towards support around 5150 and two month lows before rallying back above 5400 again. Over the last few weeks the Australia 200 index has struggled with resistance at 5400 which has forced it lower time and time again. The 5400 level has been a major player for the last 12 months and the index must get back above this level to encourage more buying and bullish sentiment. It enjoyed a solid resurgence throughout October after getting much needed support from the 5200 level, which has resulted in it moving back above the 5400 and 5500 levels, around a two month high.

Australian businesses reported a marked improvement in conditions in March as a pick-up in sales and profitability gave firms the confidence to pump up plans for capital investment, a survey showed on Tuesday. National Australia Bank’s monthly survey of more than 400 firms showed its index of business conditions rose four points to +6 in March, above its long run average of +4. That helped lift confidence by three points to +3, so reversing all of February’s downturn. The pick-up would be a relief to the Reserve Bank of Australia (RBA) which cut rates to record lows of 2.25 percent in February aiming in part to revive “animal spirits” in the business community. “Business conditions recorded a notable lift, with each component – trading, profit, employment – posting an improvement,” said NAB’s chief economist Alan Oster. “If maintained it could well boost confidence further.”

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