Australian ASX 200 SPI futures look vulnerable, with bearish signals continuing to pile up on the charts.
On the left-hand side, we can see price trading beneath the 50-day moving average, a level it bounced from strongly when tested earlier in the year. Having closed beneath it on Thursday, another bounce was seen in overnight trade where volumes are typically far lower than the day session. However, so far, the rally was sold into, leaving price dangling just above uptrend support.
While it comes with the disclaimer that price action around month-end always needs to be treated with caution, unless we see a solid bounce during the day session, the unconvincing price action over the past week may be enough to encourage bears to seek out lower levels.
The momentum picture has turned noticeably over recent weeks, with RSI (14) trending lower and now beneath 50, indicating pressure is swinging to the downside. MACD also points to waning topside pressure, having crossed the signal line before moving sharply lower towards negative territory. At the very least, it suggests momentum is turning, increasing the probability of bearish setups playing out.
On the weekly timeframe on the right, as things currently stand, we’re staring at a bearish engulfing candle—another warning sign that downside may be looming. It’s obviously not completed yet, but without a meaningful rally on Friday, it may not be lost on other traders, especially given how poor price action has been recently.
If we see a break and close beneath the May uptrend, shorts could be established below the level with a stop above for protection. Possible downside levels to target include 8830, 8750 or 8600, depending on desired risk-reward from the trade.
Should price continue to hold the uptrend and bounce back above the 50DMA and close there, the setup could be flipped, with longs established above the moving average and a stop beneath the uptrend. A break above minor resistance at 8950 could open the door for a potential run back towards the record highs.
Good luck!
DS
On the left-hand side, we can see price trading beneath the 50-day moving average, a level it bounced from strongly when tested earlier in the year. Having closed beneath it on Thursday, another bounce was seen in overnight trade where volumes are typically far lower than the day session. However, so far, the rally was sold into, leaving price dangling just above uptrend support.
While it comes with the disclaimer that price action around month-end always needs to be treated with caution, unless we see a solid bounce during the day session, the unconvincing price action over the past week may be enough to encourage bears to seek out lower levels.
The momentum picture has turned noticeably over recent weeks, with RSI (14) trending lower and now beneath 50, indicating pressure is swinging to the downside. MACD also points to waning topside pressure, having crossed the signal line before moving sharply lower towards negative territory. At the very least, it suggests momentum is turning, increasing the probability of bearish setups playing out.
On the weekly timeframe on the right, as things currently stand, we’re staring at a bearish engulfing candle—another warning sign that downside may be looming. It’s obviously not completed yet, but without a meaningful rally on Friday, it may not be lost on other traders, especially given how poor price action has been recently.
If we see a break and close beneath the May uptrend, shorts could be established below the level with a stop above for protection. Possible downside levels to target include 8830, 8750 or 8600, depending on desired risk-reward from the trade.
Should price continue to hold the uptrend and bounce back above the 50DMA and close there, the setup could be flipped, with longs established above the moving average and a stop beneath the uptrend. A break above minor resistance at 8950 could open the door for a potential run back towards the record highs.
Good luck!
DS
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.