S&P ASX 200 – The Australian Bourse Loses Momentum

ASX 200 (5,142.80)

Points to consider in this Technical analysis article:

• Buyers are now looking to challenge the next resistance barrier at 5,292.
• Upwards momentum is now losing some steam.
• Trade strategy: Stand aside

The stock market from the Down Under, the Australian ASX 200 has broken through the double top resistance level at 5,075 an is inching its way higher. Buyers are now looking to challenge the next upside barrier lining up at 5,292. There seems to be little in the way of stopping this move and no big resistance levels to worry about. However, looking at the oscillators, there is waning momentum on both the CCI and the RSI indicators. This means this rally could be running out of steam and we could see some consolidation in the market after a bit of profit taking.

Australian ASX 200 Trade Strategy

Let’s discuss the upcoming trade strategy with the Australian ASX 200 equity market. There is too much market volatility from a macro standpoint this week to warrant a long or short trade. We have the upcoming European Central Bank (ECB) monetary policy meeting which can derail price positioning.  Those traders who have open long trades or want to enter a long trade should wait for momentum to pick up. There is solid support at 5,075 to protect the downside. As long as the ASX 200 remains above this key support level, the chances for more gains remains solid. However, with the upcoming ECB decision this week, I will opt to stand aside and wait before placing any trade as we could see a lot of volatility at the end of the week with not only Australian stocks but global equities and financial markets. Traders also need to watch China. Economic data has been weak coming out of the world’s second largest economy. This will have an impact on Australia, especially in the mining sector. China is the largest importers of Australian metals.