Hi all, the slow grind up in the AUS200 CFD continued this...

Hi all, the slow grind up in the AUS200 CFD continued this week. The market began the week predictably by gapping up above the bear daily directional line, consolidating there for the entire Sydney session before sprinting higher and greeting the weekly directional line during the evening session. At the daily close we had a daily directional line switch back to bull and then price meandered sideways for the remainder of the week. Price managed to close the week out above the high of the previous weekly directional line, in turn flipping the weekly bias to bull.

The weekly psar also flipped to bull and closed out at the quarterly moving averages. The daily chart shows a condensed view of the past two months, price has once again found a significant resistance level that is capping the rally from continuing higher.

The monthly candle will close at the end of this forthcoming week and as displayed is poised to possibly close above some significant monthly resistance if it can close above the 5620 level.

As price is seen in the higher time frames the rally wants to continue higher. A change of direction now would require price to reject the moving averages and defeat the daily and weekly directional lines down below on a closing basis, and then psar also needs to be defeated on both the daily and weekly time frames for a bear assault to follow, It could happen but it doesn’t look likely here.

For the bears there is a 4 hourly head and shoulders topping formation in the making. Price is still setting up and there is no guarantee of this playing out this way at all but one could get involved with an aggressive limit order short entry placed around that 5600 level with a stop above the swing high, 5640 on this chart. A relatively small risk would offer a big reward for a swing down to the neck line or lower to the green trend line pictured on the chart if we get follow through.

Good luck everyone and happy trading…