ASX 200 Rally Hits a WallAustralia 200 CFDFOREXCOM:AUS200FOREXcomThe ASX 200 has seen nothing but one-way traffic since hitting record highs, with deteriorating technicals compounded by disappointing results from Australia’s big banks and, today, a very soft earnings report from prominent retailer JB Hi-Fi. That latter result is potentially important given what it may be telling us about cyclical parts of the economy, coming in the wake of accelerated nationwide falls in house prices, unpopular budget changes and earlier rate increases from the RBA. As a result of that combination, we’ve seen the index break beneath 9,200, which had previously acted as resistance, before the sell-off accelerated towards 9,063. That was the former swing high from April and also acted as resistance earlier this month. With the price now sitting just above 9,063, it looms as a potential level to initiate trade setups around depending on how the price action evolves. Given the direction and speed of the move towards it, along with a bearish MACD crossover earlier today, traders should be on alert for a potential break of 9,063. If the price were to break beneath 9060 and hold there, one option would be to initiate shorts with a tight stop above for protection, targeting 8,900. That’s where former resistance that flipped to support converges with the rising 50-day simple moving average, and where you can see buyers were active beneath earlier this year. Of course, if 9,063 holds, there is also the option to initiate longs above the level with a tight stop beneath for protection, targeting a retracement back towards 9,200. If that level were to give way, it would open the door to a retest of the record highs. However, given the technical and fundamental backdrop, longs screen as the least likely of the setups to succeed. Good luck! DS