The Australian 200 index (ASX: S&P/ASX 200) finished the week on the front foot, as global risk sentiment improved on the passing of the US debt ceiling agreement. With the RBA interest rate approaching next week, it might be a good time for traders to position themselves for directional price action. 

The index enjoyed a boost from the risk-on market mood, while gold stocks aided the upside, as reduced bets for a Federal Reserve interest rate hike supported the bullion. Oil prices were also on the rise, and with the RBA expected to leave interest rates unchanged next week, the index could enjoy additional upside. However, today’s highly anticipated jobs data from the US could dent sentiment heading into the new week. 

Technical 

The descending channel on the 1D chart is holding firm, with the bulls finding support at the Fibonacci golden ratio of 7,080.8 from the mid-April peak. In the Friday session, the bulls traded above the daily pivot point of 7,106.9 to break through the Fibonacci midpoint at 7,137.9. 

If the jobs data from the US support the risk-on, the index could continue its upside within the channel, where the 38.2% Fibonacci retracement at 7,194.9 stands in the way of a channel breakthrough at 7,265.4. In this scenario, the higher resistance is at 7,341.8.  

Alternatively, if sentiment changes, the index could reverse for a retest of support at 7,080.8. A breakdown could lead the bears to leg lower toward 6,999.7 and 6,896.3 to complete the retracement. 

Summary 

The risk-on mood lifted the Australian 200 index, as the equity market finished the week strong. If the US jobs data confirm this sentiment, the bulls could continue within the channel toward 7,194.9 and 7,265.4. 

Sources: Koyfin, Tradingview