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The market has been hit by several macro concerns over the past week with China growth issues, the AUD hitting four month highs and irregular data from the US.
The market has managed to resist these downward pressures finding strong support at the major support level which is the 50% retracement of the February rally in 5270 and the minor support line which is the crossing of the 100 day moving average at 5313.
If the 50% retracement level is broken it’s like the ASX is heading for the 200 day moving average which is 5249 and it’s out of the realm of possibility in the next week. If US economic data disappoints and the RBA starts to concentrate on housing and speculative lending rather than the broader sphere - global market gloom and possible bets on a high AUD will see the these levels tested further.
On the flip side for every down day on macro concerns has been preceded by two or three positive prints, however it tends to finds resistance quickly. Minor resistance kicks in at 5370, with the major level at 5390.
Although a north print is a possible direction for the ASX, the macro fundamentals suggest the likely move is to the downside in the interim.
I would suggest shorting strength around the 50 day moving average of 5450, with a stop at 5373 (just over the minor support). I would place a limit at 5305 as it’s likely the index will run over the 100 day moving average before coming back to hold on this level.