Breakout Risk Builds Before RBAOur ASX 200 contract continues to trade within a narrow range heading into the RBA’s December rate decision, with sellers active above the February high of 8,627 while buyers are lurking on dips below 8,575. Despite multiple probes through both levels over the past fortnight, there has been no close beyond them since 25 November—and that attempt failed.
While there’s no guarantee the RBA decision will deliver a range break, it does present a risk event with the potential to do so. With a well-defined range in play, a sustained breakout in either direction would allow trades to be set targeting a retest of higher or lower levels.
Should the price break and close above 8,627, longs could be established with a stop beneath the level, initially targeting 8,726 given it previously acted as support earlier this year. Conviction in the setup would be bolstered by a close above 8,650.
Conversely, a sustained break beneath 8,575 would flip the setup, with shorts established below the level and a stop above. The 200DMA or 8,417 screen as potential targets. Conviction would grow should the price close beneath the December MTD lows.
Momentum indicators lean marginally bearish on directional bias, though the overall signal is more neutral, placing emphasis on price action. Also note we’re approaching what is traditionally a strong seasonal period for Australian stocks in the second half of December.
Good luck!
DS
