AUS200 – BuY on Trend.

/ The index (AUS200) is available for trading on the Varchev Absolute Trader platform. The article is not a trade recommendation. /

Unlike the ECB AND FED, the RBA may pause interest rate hikes at its next meetings and the economy’s close ties to China suggest a good opportunity for expansion.
The Australian index (AUS200) is broadly correlated with the rest of the indices of developed economies, but in recent days there have been signs of weakening. The reasons are mainly of a fundamental nature, lower interest rates, a softer Central Bank, potential for greater growth and a relatively weak currency, which is a plus for export-oriented Australia, giving a relatively better Risk/Return.

Short Term Market Profile

The data from the last year shows an increase in volumes in a relatively broad zone – (7000 – 7350), which suggests that the passage through the zone is potentially difficult and slow and it can provide support.

Technical Drawing

Up trend, there are indications that the downward correction is completed in the area of diagonal and horizontal support (7100 – 7200). Sequential prints a new wave up and DeMarker is headed for overbought. I expect the development of another upward wave and a potential test of the resistance zone 7580 – 7660.

Conclusion

A buy on a slight pullback around 7240 – 7280 will give a good R/R with a potential target in the resistance zone.

Alternative scenario:

A close below the local and diagonal support (7100 – 7200) will mean a potential correction of the entire rise after the bottom. Stop loss for long is below the support zone, measured against the size of the margin account.