ASX hits record high in thin trade, but double top clouds the outlook

Thursday provided the usual dose of thin trading ranges and low liquidity around Thanksgiving, making technical less reliable. And we could be in for another quiet day heading into the weekend, which means traders have a choice of referring to much lower timeframes in hope of catching smaller moves, being patient with higher timeframes, or simply taking the day off. We also have month-end flows to factor in which can often prompt spurious price action and the occasional unexplained price spike.

Therefore, today’s article will be short and simple and effectively a revision of yesterday’s. My bias towards ASX 200 futures remains bearish but, as always, timing is key.

Events in focus (AEDT):

10:30 – JP jobs/applications, Tokyo CPI
10:50 – JP industrial production, retail sales
11:30 – AU housing credit
16:00 – JP construction orders
20:30 – UK money supply, mortgage lending
21:00 – EU CPI
22:00 – UK BOE governor Bailey speaks
00:30 – CA GDP

ASX 200 futures (SPI 200) technical analysis:

I noted that the ASX 200 futures market had so far struggled to break above 8500, and given the weak lead from Wall Street I had a hunch that the ASX could fall on Thursday. But it clearly had other plans, instead opting to retest the 8500 level before closing at a fresh record high.

However, once again the market has struggled to conquer 8500, and the record high was achieved during thin trade. Daily volume was also the lowest in five days, and the record high was really set with a market’s tendency to drift higher as opposed to any sort of aggressive bullish initiation. Ultimately, I remain sceptical of a runaway breakout and on guard for a move lower.

A double top has formed around 8500 and prices broke lower from its supposedly bullish channel. All three Wall Street indices futures markets printed unconvincing up-days within their prior day’s bearish ranges, the S&P 500 remains trapped beneath its own record high.

The bias remains to fade into rallies on the ASX, in anticipation of a move down to 8400. A break beneath the 8378 low brings the 8348 VPOC and 8307 lows into focus.

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.