ASX 200 support at 5750, 5650 or 5550: which is most relevant? Judging by some of the questions received, I succeeded in confusing a number of readers. Here is a brief summary:
- 5750 acted as medium-term support until the beginning of May, when breach of 5750 and the rising trendline warned of a correction.
- 5750 transformed into medium-term resistance and penetration would suggest the correction is over.
- There is a strong band of support between the two recent (2014) highs of 5650 and 5550.
- Breach of this band (i.e. below 5550) would indicate a test of primary support at 5120.
- Respect (i.e. 5550 intact) would provide a solid base for a rally and a further (primary) advance if resistance at 6000 is broken.
Mild decline of 13-week Twiggs Money Flow suggests medium-term selling pressure — not a reversal. Recovery above 5750 remains more likely than breach of 5550.
* Target calculation: 6000 + ( 6000 – 5750 ) = 6250