The Australian 200 Index Futures (ASX: S&P/ASX 200) closed Tuesday’s session flat despite the improving business mood in Australia as the market shifted its focus towards the Chinese and US inflation data due later on the week.
Australia’s NAB business confidence index saw an encouraging uptick in July 2023, reaching a level of 2 compared to a revised -1 in the preceding month. This increase points towards a noteworthy upswing, hitting its highest mark since January. However, it’s essential to note that the reading, while improved, remains historically low.
The market now shifts its focus to the US inflation report due on Thursday, which will be highly anticipated, following the release of a softer-than-expected NFP figure last Friday.
Technical
The 4H chart shows that the price action found support at the 38.20% Fibonacci retracement level following the bulls’ failure to break above the 7,473.3 price level. The price action is now consolidating around the 50-EMA (blue line) ahead of the US inflation data ahead, with the 23.60% and 38.20% Fibonacci retracement levels likely acting as levels of interest in the coming sessions.
A push above the 23.60% Fibonacci retracement level could offer short-term trading opportunities towards the 7,473.3 resistance level, a previous hurdle for the bulls. A break above the level could confirm the bullish momentum, likely leaving the major resistance level at 7,563.0 (solid green line) within the bulls’ reach. However, a push below the 38.20% Fibonacci retracement level would bring the support levels at 7,180.0, corresponding to the 61.80% Fibonacci retracement level, and 7,065.4 into play in the short term.
Summary
With the price action seemingly finding shelter around the 50-EMA ahead of the inflation reports from the US and Asian powerhouse, China, the index future is poised for increased volatility in the coming session. Traders should keep a keen eye on the 23.60% and 38.20% Fibonacci retracement levels for a potential short-term direction of the index futures.
Sources: TradingView, Trading Economics, KoyFin, Reuters, MT Newswire.
