ASX200 Day trading: comments, analysis and opinions

Last trading week of July 2017: ASX 200 at cross-roads
It's been over two months (from 18th of May) since ASX 200 has been trading in a little more of 200 points range: 5630 level to 5836. Within this range, the daily ranges are becoming smaller and smaller so it looks we have a symmetrical triangle chart pattern forming with lower highs and higher lows.


Trading opportunities for next week
Have a look at the chart above where the blue lines are forming a triangle and expect to intersect some time soon.

Next week it is likely to see where the triangle will be broken: up or down.

Scenario 1 : Upward Breakout

If ASX 200 takes the resistance line then it is a breakout up which is a bullish signal of continuation of the previous trend .

The next resistance would be 5778 - the previous high. Next ones could be 5786 (which is the 72 MA ) and the upper range high at 5836.

Scenario 2 : Downward Breakout

If ASX 200 breaks the support line (breakout down) this will a bearish signal and first support would be at around 5665 level - previous low and the level of 200 MA.

A stronger support area is between 5611 and 5630 - the lower range low.

Scenario 3
More of the same.
Ranging.

How will you tell if a breakout to the upside or
The downside is a portion of a continued range?

At what point do you call a return to a bull or bear trend---
I'm not seeing that on your chart.

Something fundamentally strong on the bull or bear side
Will need to occur to get any renewed trend EITHER way.

Don't see that YET
So scenario 3 for me.

Yes as Tech/a suggests, the fake out is always a possibility. Such a weak market for years has been the ASX.

With its heavy weighting in financial and commodity stocks, it’ll be interesting to see if the ASX200 can outperform again this quarter.

While rising bond yields is sending US futures and other major Asian and European indices lower today, the local market index closed marginally higher despite paring early gains. Outperformance doesn’t have to mean a rally towards its highs, but the ASX could avoid as aggressive of a sell-off that other tech-heavy indices might face on soaring yields.

However, the rise in commodity prices that supported the index last quarter could come under pressure as Covid cases in China continue to surge. Nio has already halted car production, citing lockdown disruptions. This could see selling pressure hit the materials sector as well, and could put the ASX200 at risk of anther steep decline if it begins to test a break back below its 200-day MA in the coming days.

All trading carries risk, but it should be interesting to watch this develop.