ASX 200 Price Outlook:
- The ASX 200 has been trapped between 6,200 and 5,800 since early June
- Previous attacks on resistance situated around 6,200 have proven unsuccessful leading to reversals
- Thus, the current trading price relative to the nearby technical barriers provides an intriguing landscape for technical traders
ASX 200 Price Forecast: Aussie Index Tags Resistance, Will it Rally?
The Australian ASX 200 has been trapped in a range since early June, fluctuating between resistance around 6,200 and support near 5,800. Despite several attacks on the 6,200 barrier, bullish appetite has seemingly evaporated each time before a bullish continuation can unfold. Now, price has returned to the same area of resistance after an almost unabated rally in October, bolstered by takeaways from the Reserve Bank of Australia’s recent policy meeting.
ASX 200 Price Chart: Daily Time Frame (February 2020 – October 2020)
With a potential rate cut on the table and price at the topside of its longstanding range, the ASX 200 looks as though it could attempt a break out. On the other hand, previous rejections have helped highlight the influence held by the area and its ability to reverse attempts higher. Thus, there are arguments to be made for a bullish break out or an imminent reversal that would see the range remain intact.
ASX 200 Price Chart: 4 – Hour Time Frame (May 2020 – October 2020)
As a result, there are two potential strategies that traders could employ when considering exposure in the ASX 200. Should bulls prevail and drive higher, further gains may materialize, effectively creating a break out trade scenario. Under this strategy, levels of invalidation would be set slightly beneath resistance and areas of interest would reside to the topside,