ASX200 and AUD/USD Continue to Toy with Key Levels

ASX200

The ASX200 index continues to toy with the key 5000 level as it dances on either side of it teasing the market and offering little clue as to what will happen next.

The perception of the significance of the 5000 level is often understated. Whilst the market’s value is only slightly different between the index at 4950 and 5050, the perception is that it is in much more bearish territory should it remain below 5000. You could argue that on this basis, way too much attention is placed on what is simply a number which means very little else.

Having said that, the ASX200 index continues to rely on whatever support it can get from that level and is presently hanging on trying to avoid another collapse similar to what it experience in August.

The ASX200 continues to form a classic descending triangle with declining peaks at 5305, 5220, 5200 and more recently at 5100 whilst the support remains steadfast around 5000. It is this level that is of course under pressure presently and being heavily scrutinised.

The index volatility also remains high and has moved higher to near 1.9%, which sets a new four year high. This indicates that the irrational behaviour is continuing and is likely to ushering some investors out of the market until the market calms a little.

XJO_20150930

With BHP closing in on a seven year low, it speaks volumes for the most popular outlook for commodities, and commodity currencies and countries. Although Rio Tinto seems to be doing an ever so slightly better job of holding on in the face of overwhelming selling pressure.

In a positive note, Westfield is making a push to break through the resistance level at $10 and potentially threaten its 2015 highs. CSL continues to hold up well and remain quite resilient to the general market trend as it remains well supported by a range between $85 and $90, and more recently the $90 level. Likewise Macquarie Group is doing well to stay within reach of $80 as it remains within reach of its 2015 high as is Scentre Group.

AUD/USD

Just like the ASX200 index and the 5000 level, the AUD/USD continues to toy with the 0.70 level as it has spent the last week dancing around it. It continues to tease and have traders confused over whether it has a better chance of being at 0.65 or 0.75 in two months time.

The sentiment appears to mainly bearish however the Australian dollar continues to be well held up and supported at the key 70 US cents level. Just below is some support at 0.69 which propped it up a few weeks ago when the AUD/USD reached its multi-year low.

AUDUSD_20151001

Stuart McPhee
Stuart McPhee

Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.