As I was predicting in last week, S&P/ASX 200 made a base around 4050–4100 level and this week it was just trying to prove its bullish pattern or I would say bullish patterns. If any of these patterns works out then it can test up to 4300 level. S&P/ASX is making higher highs and considering its last few higher lows, it is clearly indicating a change in environment. So in early days if it breaks 4200 level in the upside then there is a good chance of testing higher levels.
Though this week’s moves are giving positive hints but last day’s figure was not good, as things can change dramatically from this 4200 level. In the downside its initial support is at around 4150 level or better to say around 4120 (61.8% retracement), considering its recent reversal and I will not surprise if S&P/ASX tries to turn around from this level in middle to later part of the coming week. Now important matter for S&P/ASX is whether it continues higher highs and higher lows or it will follow the reverse symmetrical triangle which was true during last few weeks.
Here if I have to come into a conclusion then I will say, it is important to watch early days movements. Considering its overbought position if S&P/ASX drops below 4100 level then it is better to look around 4050 level. If S&P/ASX breaks that then things may not be that good as was expected after Thursday’s big move. On the other hand if I consider that S&P/ASX is moving in an upward channel then it will not drop below around 4100 level in coming days.
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