ASX 200 Forecast: Find Buyers on Dips

• The first thing I see when I look at the Australian Stock Exchange 200 is that although we sold off significantly during the trading session on Friday, we have seen buyers come back into the market and take over the overall momentum.
• At this point in time, the market is forming a bit of a hammer, and this Hammer suggest that we are going to continue to see a lot of buying pressure.

If we were to break above the AU$8250 level, then I think it opens up a much bigger move, and it does make a certain amount of sense that we would see the breakout bring in fresh momentum. Keep in mind that the Australian index is one that a lot of people pay close attention to, as it is a great proxy for risk appetite and of course what happens in Asia. Remember, Asia is highly influential on the idea of demand for Australian goods and financing, as the Australian economy is so heavily influenced by the commodity markets and what is going on there.

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I think at this point in time, it’s obvious that the market continues to see plenty of momentum, but if we do break above the AU$8250 level, then it’s very likely that we could see this market go looking to the AU$8500 level. In general, this is a market that will be very choppy and noisy, but I also recognize that it will more likely than not end up being a situation where we see a lot of overall bullish pressure as traders look for some type of return is a market that is becoming increasingly uncertain.

One-Way Trade

It’s possible this might be a one-way trade, but I also think you need to be very cautious with the idea of what your position sizing is. After all, the lesson you want to do is “buy at the top”, but at this point time it looks like the momentum is clearly to the upside and therefore I don’t see any situation where you start to look to short this market. If you see US indices falling apart, then you might be able to make that argument, but until then I think it’s higher for longer.

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