The ASX has gained 5.6% so far in April, but many in the market are expecting a reversal and so the question is what levels does the ASX need to break through before we can definitively say this rally has legs.
The ASX on Wednesday managed to close above 5200 for the first time since 4 January. There still looks to be plenty of momentum behind the current uptrend and the MACD oscillator is far off indicating a reversal. A close above 5300 would bring the index close to the 61.8% Fibonacci retracement line from where the index sold off at the start of August.
But the level everyone in the market is watching carefully is 5352, which is where the ASX closed on 23 October marking its highest close since the early-August sell-off. Of course, should the ASX be rejected at any of these key levels, that could signal we are in for a sharp decline and may be a good entry point for short positions.