Talking Points
- The ASX 200’s well established range was under some downside threat recently
- However, it survived that foray lower and now looks as entrenched as ever
- There are no clear signs of any serious short-term threat
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The ASX 200 remains in jail, and its sentence looks as indeterminate as ever.
When I last took a look at the index, the base of the very narrow, 160-point range which has essentially contained all the trading action since May was coming under a bit of pressure. However last week’s sharp revival of risk appetite saw the base successfully defended yet again, and the endurance of that range. Indeed, it never came under any serious attack, even though it looked as though it might, at last, for a while there.
And so, as we move into the year’s final three months, is there any prospect of a range break, either way? Well, not obviously so.
Indeed, as if to vex us further the ASX is at the time of writing almost exactly in the middle of that range, with neither momentum indicators or moving averages telegraphing any meaningful clues. For the moment, it seems that the bulls have the table and that a modest uptrend from August 29’s intraday low point is still in play.
But, given all of the above, it would be a very brave investor who would ride this much higher than the 5768-5799 region where the last two forays higher have petered out.
This extraordinarily narrow range does exert a grim fascination and it will only become more interesting if it looks as though it will endure into year end. However, in the absence of any clear technical signal suggesting a break in either direction, it still looks as though those scant, 160 points or so are really all investors have to conjure with.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX