Market News & Analysis
ASX200 Closes The Week To A Record High
Matt Simpson January 10, 2020 7:00 PM
Now just shy of 7,000, bulls finally managed to break the index above the financial crisis highs.
- Healthcare and consumer discretionary sectors have continued to lead the way these past 52-weeks (and obviously the ASX200). Although it is Health care and consumer service stocks which have outperformed this week. In fact, even energy has outperformed, despite oil prices falling as geopolitical tensions receded.
- Financials remain in the doldrums although trade just above their 52-week lows. That said, the sector appears to be carving out a base and a break above 6,150 confirms a trend reversal.
Back in July we saw an intraweek test of the GFC (global financial crisis) highs. Yet it was short-lived. Instead, a bearish hammer closed below 6,800 and marked the beginning of a 7% decline. Since then, price action has been choppy on the weekly chart, but today’s thrust higher is a clear victory for the bulls; not only was it the most bullish week since February, but it comfortably cleared the GFC high. Overall, it looks very bullish.
There’s clearly demand around 6,700 as price action rebounded from the 26-week (6-month) moving average. Furthermore, the candles have left a double bottom / tweezer bottom formation.
Switching to the four-hour chart, we can see the final candle was relatively small heading into the close. We can take our direction from US market on Monday morning but, unless they push to new highs later today, we could expect a little mean reversion on Monday.
- Bias is for a break to new high after a minor retracement.
- From here, we’d like to see the 6581 – 6894 zone hold as support, so a retracement in this area could lull bulls back to the table and potential break it to new highs.
- Whilst a deeper retracement is still acceptable, a shallow one would be preferred as it serves as a testament to the strength of the bullish breakout. But it would become a little concerning if prices break and hold below 6,800.
- A break below 6,750 brings the 6,7000 lows into focus.
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.