Technicals - ASX200 index - risk and expectation for a renewed sell off

Angela Mangan

QMG Pty Ltd

The ASX200 index generated a technical sell signal as a result of the close below the 5310 support level on 14/6/16. The nominated downside target located at 5075 was reached on 27/6/16. The rally off the recent low @ 5051 has not resulted in an upward reversal being generated, which is the technical requirement for base forming to occur / a re-entry buy signal to be generated. The ASX200 index technicals remain negative. The rally that has occurred over recent days may continue in the very short-term, but in my view is unlikely to be sustained. The risk and expectation remains for a renewed secondary sell off to occur. The first indicator of market momentum turning on a sustainable basis would be an increase in the number of large cap stocks generating new buys signals, and this has not yet occurred. This would commonly emerge prior to the index technicals turning positive.

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Angela Mangan
Angela Mangan
Technical Analyst
QMG Pty Ltd

Angela has over 30 years experience in the technical analysis field. She provides technical analysis coverage of major Australian and global stocks / key markets, including provision of a bespoke technical service to wholesale clients.


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