The ASX 200 is headed for another test of resistance at 5100 on the hourly chart. Breakout would signal continuation of the primary advance. Reversal below 5050, however, would indicate another test of 5000.
The monthly chart shows strong momentum but retracement to test the new support level of 5000 is likely in the weekly (if not monthly) time frame. Respect of support on the weekly chart would confirm a primary advance with a long-term target of 6000*.
* Target calculation: 5000 + ( 5000 – 4000 ) = 6000
ASX small-caps are still doing badly, with the ASX 50 [$XFL] out-performing the $XSO by a substantial margin. That is the opposite of what one would expect in a bull market and should be treated as a warning to exercise caution.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.