ASX 200 TECHNICAL ANALYSIS: CLOSER TO A LASTING REVERSAL?

ASX 200 TECHNICAL ANALYSIS:

• ASX 200 could be putting in a reversal of its dominant uptrend since April
• Immediate support is 5,982 and a push below that exposes a January line
• If the index climbs, it faces a near-term falling line prior to key resistance

The ASX 200 once again appears to be heading lower after failing to push above the highs placed back in early January and thus forming a Double Top reversal pattern. Further backing this argument is the presence of negative RSI divergence which shows ebbing momentum to the upside. A pronounced reversal may eventually find the index testing the rising trend line from February 2016 followed by key horizontal support at 5,682.

ASX 200 WEEKLY CHART: DOUBLE TOP, NEGATIVE RSI DIVERGENCE

On a daily chart, we can take a closer look at critical areas to watch if the ASX 200 reverses its dominant trend from April. Standing in the way as immediate support appears to be 5,982 which consists of the May 24th and May 28th lows. A push below that exposes a descending resistance line from January 2018 which could act as new support. This area is also closely aligned with the 38.2% Fibonacci Retracement at 5,951. A break below that places the 50% midpoint at 5,951 as the next target.

If the ASX 200 tries to climb back to 6,151, immediate resistance is 6,060 which consists of the May 3rd, 4th and 20th lows. A push above that places a near-term descending line as the next target which could halt its progress. An ascent above that paves the way for the ASX 200 to retest the January and May highs. In such an instance, a struggle to push above this critical area may even lead to a triple top bearish reversal pattern. With that in mind, keep a close eye on RSI for any divergences.

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