Four weeks ago the ASX 200 index made a new high since the GFC at 5250 and it very much appeared that the strong bull run of the last twelve months was set to take off again. The market bears had other ideas, wiping 500 points off the index in four weeks, well under the important resistance/ support level of 5000 points. It is now testing support at 4750 and marks the 50% retraction level of the last impulsive move higher.
The fall has been quite precipitate, and will form a lower low on the daily chart, raising fears that our market could now trend even lower. On the weekly chart however, an uptrend is still in place. Another consideration is that the RSI indicator today was only 19, well into the over-sold extreme.
When the market opens tomorrow traders will be watching closely to see if the market rebounds off 4700 support before adopting new long positions.
- All Ords Index week ending June 7th (letstradeshares.com)
- Gold Bear Train Wreck? (safehaven.com)
- Share market under pressure as Australian dollar hits 33-month low against greenback (abc.net.au)