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Australian Stock Index Technical Analysis - Australian Stock Index Trading: 2018-09-27
Improving Australian data bullish for AU200
August leading economic indicator edged up in Australia, a signal of accelerating growth. Will the AU200 recovery continue?
The Reserve Bank of Australia left the interest rate at 1.5% and signaled a steady policy ahead at its September 4 meeting. It forecast inflation increase for 2019 and 2020, and the central forecast is for the growth of the Australian economy to average a bit above 3% in 2018 and 2019. In the first half of 2018 the economy is estimated to have grown at an above-trend rate. Recent economic data were positive: the Westpac-Melbourne Institute Leading Economic Index in Australia rose by 0.1% over month in August after a flat reading in July. The index is used for predicting economic growth conditions and signals accelerating growth of Australian economy. Positive Australian data is bullish for AU200.
On the daily timeframe AU200: D1 is retracing higher following the decline after hitting 11-year high in the end of August. The price had fallen below the 50-day moving average MA(50) but is about to test it now.
- The Parabolic indicator has formed a sell signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is below the signal line with the gap narrowing. This is a bullish signal.
- The stochastic oscillator is falling but has not reached the oversold zone yet.
We believe the bullish momentum will continue after the price breaches above the upper Donchian boundary at 6210.63. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower Donchian channel at 6123.59. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (6123.59) without reaching the order (6210.63) we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Buy |
| Buy Stop | Above 6210.63 |
| Stop loss | Below 6123.59 |
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