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That note readied investors to buy the index on a looming break above my former target at 5425. With a high of 5504 recorded last Thursday, that trigger has been activated, and a fresh buy recommendation is now in place.
The last update highlighted the resistance on the ASX 200 in a tight band defined as 5403-5425, but also noted the index was behaving with less intimidation this time around (unlike its two previous attempts, where aggressive pull-backs followed soon afterwards). Sideways trading around strong resistance levels is usually a precursor to a fresh breakout. My attached charts aim to provide readers with a better understanding of just where these resistance (and support) levels lie in the first place.
Although the ASX 200 has since come back to retest 5403-5425, the implications of last week’s initial breakout could be significant. It now allows me to project ahead into a new and higher trading range, with an ultimate target band as high as 6175-6276. It could also herald a change in fortune for the unloved and under-owned mining sector, which may impact upon other global indices too.
Recommendation: buy. Target 6175. Stop-losses can be set to trigger on a fall beneath 5200.