Many of you would have read the post earlier in the week from Michael McCarthy which detailed the ranging behaviour of the Aussie 200 index at the moment. This morning I wanted to take a look at something a little bit more short-term in nature but which can easily be read in conjunction with the ranging market conditions which we are seeing at the moment.
Today we have GDP and Industrial Production figures being released in China. There has been a lot of talk about the economist survey and even the 'whisper' numbers for these which has wound everyone in the market very tightly as we await the numbers. Whilst bad numbers from China will be greeted very poorly by the market it will be interesting to see if even coming in on target will be enough to trigger a rally. I would suspect so - but based on what economists are saying the chances don't sound overly high that we will see good numbers. In any case I will be watching the hourly chart and using that as the gauge of sentiment both before and after the numbers.
The centre red line here is the 50 hour moving average and you can see that this has been a really good trendline for the Aussie 200 over recent days. You can also see how the -1.25SD of the 200 hour moving average (2nd blue line from the bottom) showed significant support until that level was broken yesterday.
If a trader was expecting numbers to be reasonable from China it may be prudent for price to clear these 2 levels before making any major decisions because as you can see they are likely to be decent levels of resistance now - a good break on these could be a sign that the short-term trend is starting to shift. I suggest you look at these levels and again check the earlier post to see where they sit in the broader picture of the market. The bigger range shows there is room to move both higher and lower so weighing up all the evidence and looking for price direction to show itself is key.