ASX 200 Week 11-15 July : Bulls on the run?

The ASX 200 index managed to close above the trend line at 5230 with a small range on Friday. Having the large move up in S&P 500 on Friday night, we could expect the index to open on Monday up 60-65 points, as futures close level on Saturday morning do suggest.

A strong open at levels between 5290-5295 would break the downwards trend line but what’s more important for near term direction of the market is what’s next.

The bullish scenario would require confirmation with a follow through up day on Tuesday. A pull back should find support now at around 5282 (intraday Monday or daily afterwards).

However, let’s consider the alternative scenario of a bearish move: The bearish scenario would mean to see a spike up on Monday then market to fall through recent lows,  first level at 5145 then next level of 5051.

This would make an ABC after the five waves formation in a downtrend.