Chart of the Day: Team effort required for ASX200 to push higher

Today we’re focused on the ASX200, otherwise known as the XJO. It’s a bellwether index for local affairs, given its relative breadth.

We’re running with a one-year chart here, a clear uptrend in place across that period, and a slightly steeper uptrend in place since the lows recorded at the start of October 2020.

That second and more acute uptrend is being tested with today’s price action, and happens to coincide with the 50-day moving average currently, which currently sits at 6938.

Should this level not hold, the first target is 6830 dating back to the gap that was left on the chart on, you guessed it, April Fools Day.

Failing that, a test of horizontal support levels and the 200-day exponential moving average around 6600 would seem to be a distinct possibility.

On the upside, should 6938 hold, bulls would be looking for 7000 to be quickly recaptured before a new re-test of all time levels just shy of 7200 could be considered.

For this to occur, you would likely need one of banks or resources to continue to put further runs on the board.

The banks have had an extraordinary move of late, with Commonwealth Bank (ASX:CBA) even going parabolic back toward $100 a share, and leaving multiple gaps along the way.

They say ‘sell in May and go away’, and whilst such adages are never quite an invitation to treat of and by themselves, after the furious rally risk assets have continued to enjoy post the entire suite of COVID-inspired intervention, some sort of moderation couldn’t be seen as that bizarre.

I’m happy to let the index tell me what it wants to do, but we do currently have a variety of exposures on the books to account for potential further weakness in the short term.

Steve Collette of Collette Capital Pty Ltd (ABN 56645766507) is a Corporate Authorised Representative (No. 1284431) of Sanlam Private Wealth (AFS License No. 337927), which only provides general advice.

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