The Australia 200 index is on many trader watch lists at the moment. I've waited for a move towards 5050 before buying - this is where I see a support zone, a retracement level on the weekly charts, and the dividend yield (with franking) kicking over 7%. However, this morning's action has prompted me to leap in and buy.

Here's why:

1) Price action. Despite heavy falls in US and European markets overnight, at the open today the Australia 200 index rejected the initial 25 point drop and has moved back to show a gain for the day.  This is an indicator of underlying strength and support. The US SP500 fell 7.2% from the recent peaks to the overnight low. The Australia 200 fell 9.8% from peak to yesterday's low. Some may conclude that the Australian market has had its correction.

2) A divergent RSI:

chart of australian share market

Note the higher lows on the RSI, in contrast to the lower lows on the index. This made me think I may not get the chance to buy at lower levels around 5050.

I've used multiple entries to establish a position at an average of 5138, with most of my stops below the overnight low at 5108. While the market may yet make further lows, it seems to me that the bull train is leaving the station - and i'm on board.