An impressive, 400+ point rally in the Australia 200 index since mid-October puts the index into a decision zone. This month, the action has changed from clearly upward to obviously sideways. The higher time frame charts are somewhat ambiguous, with the weekly and daily charts offering few clues to near term direction. It's time for a close up look:

20141111 aus200The four hour chart is also showing sideways action. However, the close up gives a clearer picture of where the important support and resistance stand.

The green lines are the "lines in the sand". Trading up through 5560 could point to significant further gains, and possibly a test of the post-GFC highs around 5680. In contrast, the downside case is tougher to read. The 5500 level has acted as support during November, with a number of false breaks. This could lead to trader caution if 5500 is breached.

While 5480 is a less well described level (less "touches"), some traders may prefer to short on trading down through this mark rather than the more traditional support at 5500. When price action "rejects" a support level - by trading below and then reverting back above, further breaches become suspect. Trading a drop through the spike low, rather than the resistance, could offer a higher probability short trade.