AU200 Forecast | Mixed Australian data bearish for AU200 | IFCM

Technical Analysis AU200 : 2020-03-27

Recommendation for ASX 200 Index:

Strong SellSellNeutralBuyStrong Buy

Below 4787.18

Sell Stop

Above 5321.32

Stop Loss

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Senior Analytical Expert
Articles 1558
RSI Neutral
Donchian Channel Neutral
MA(50) Sell
Fractals Neutral
Parabolic SAR Sell
Fibonacci Sell

Chart Analysis

IFC Markets Tech Analysis

On the 4-hour timeframe AU200: H4 has fallen back below 50-peiord moving average MA(200) which is falling. We believe the bearish momentum will continue after the price breaches below the lower Donchian boundary at 4787.18. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above 5321.32. After placing the pending order the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (5321.32) without reaching the order (4787.18) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Fundamental Analysis

Australia’s consumer confidence and PMI deteriorated more than forecast in recent weeks. Will the AU200 rebound reverse?

Australia’s economic data in the last couple of weeks were mixed: consumer confidence slipped in March and private sector contraction deepened. The Westpac Bank Consumer Confidence Index for Australia slipped to 91.9 in March from 95.5 in the previous month, when a decline to 94.7 was forecast. And the Commonwealth Bank Composite PMI for Australia fell to 40.7 in March from 49 in February, when a decline to 48.3 was expected. Readings below 50 indicate contraction while higher readings point to expansion. However the latest labor market report showed unemployment rate ticked down to 5.1% from 5.3% in February, partly due to slightly lower rate of labor force participation. Deteriorating data are bearish for AU200. Against the background of broadening impact of coronavirus on global economy, Australia’s central bank cut interest rates twice in two week period to a new record low of 0.25% aiming to cushion country’s economy against the impact of the coronavirus. At the same time Australia’s government launched an $11.4 billion stimulus package on March 12. The fiscal measures include payments to small businesses to encourage hiring, payment to people collecting government benefits such as old-age or veterans benefits, business subsidies in industries which have been hit hardest by the coronavirus (such as tourism). With many major governments embarking on fiscal and monetary stimulus programs to aid economies in weathering the downturn caused by coronavirus outbreak, investors confidence was boosted which was translated into a rebound in most stock markets. Recovering risk appetite is an upside risk for AU200.

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