The Australian market has been trapped in an investment-numbing sideways trend for the past six months. The resistance level at 4,300 on the S&P ASX 200 has proved almost impossible to crack despite frequent attempts. The breakout above 4,300 is exceptionally important for two reasons.
First, when strong resistance is broken it means that long-term selling pressure has finally been overcome. The more powerful the resistance level, the more powerful the breakout. Think of it this way, the market has been overwhelmed again and again at 4,300. The strong breakout above 4,300, moving quickly to 4,346 shows that most of the potential bearish sellers at this level have now been cleaned out of the market. The next batch of sellers typically sits at a much higher level. The result is that the breakout has a clear run up to the next, often much higher, resistance level. Any pullback towards 4,300 is a good entry point for a strong rebound from this resistance level now acting as a support level.
The stronger and more prolonged the resistance level, the stronger it is as a support level when the level reverses its polarity from resistance to support. This is a major and significant trend breakout in the S&P ASX 200 .Page 1 of 3 | Next Page