Price action since February in the Australia 200 Index has done traders a favour by marking out clearly defined support and resistance. Although I don't have a trade today, the release of Australian and Chinese data over the next few days could lead to multiple set ups.

Australia 200 - daily

20130529 xjoAt the moment the index is sitting in the middle of the zone - hence no trade. My view is that the ideal situation is a push down to the support between 4,880 and 4,920. I'm happy to buy in that area, as I believe the technical support coincides with dividend yield support.

More problematic is a push towards 5,025. Clearly, some traders are likely to trade the range - selling around 5,020 with stops above 5,025.

This looks less attractive to me, and am more likely to buy a break above 5,025, even if oscillators are overstretched.