- The ASX 200 has fallen 5.3% from highs struck in August.
- The index is now approaching key technical support. David Coloretti, Technical Analyst at The Markets Academy, says the risk of this support level breaking is “increasing rapidly”.
- The ASX currently trades at 6039. Coloretti says support currently kicks in between 5950 to 5975.
Australian stocks are getting slammed again on Tuesday, adding to the significant losses seen on Monday.
The benchmark ASX 200 Index has now fallen 5.3% from the multi-year high struck in August, leaving it perched just above key technical support.
According to David Coloretti, Technical Analyst at The Markets Academy, “bearish risk remains high” based on the price action seen in recent weeks.
“The ASX 200 Index produced a bearish reversal month in September after achieving a new 10-year high in August,” he says.
“New index highs in Q1 and Q3 2018 have failed to produce new highs in long-term momentum. This long-term momentum threat remains significant and as such we maintain a bearish multi-month outlook.
“While we continue to target a test of the base of the 2016/2018 uptrend at 5950/75, we see the risk of this support level breaking increasing rapidly.”
While Coloretti expects the index to test the uptrend in the short-to-medium terms, he says a month-end close below this level is “required to truly set up a sustainable multi-month decline”.
The ASX 200 currently trades at 6039.
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