ASX 200 SPI futures are so oversold on the daily timeframe that you can’t help but notice, especially when looking back over recent years. The only time an RSI reading this low didn’t spark some form of bounce was during the height of the pandemic panic in early 2020.
But being oversold alone isn’t enough to trade against the prevailing strong bearish trend, putting extra emphasis on Wednesday’s price action. To get bullish and position for a countertrend squeeze, we need a price signal for confirmation.
I’m watching 7796—the price dipped below this level in low-volume trade during the night session before reversing back above. It’s only a minor level, but beneath it there’s not much for bulls to hang their hat on until 7600, where buyers stepped in last year.
Depending on the price action around the open at 9:45 am AEDT, if bulls defend 7796 again, the risk of a squeeze increases, similar to what we saw on Tuesday.
Longs could be considered above the level with a stop beneath the session low for protection. 7900 is one potential target, with 7996 and former uptrend support around 30 points higher alternative options for those seeking greater risk-reward.
A clean break and close below 7796 would invalidate the squeeze setup. Unless accompanied by fundamentally bearish news, flipping short after recent declines would be risky.
Potentially working in bulls’ favour, iron ore futures in Singapore had a solid session overnight, lifting nearly 1% to $101.70 per tonne.
Good luck!
DS
But being oversold alone isn’t enough to trade against the prevailing strong bearish trend, putting extra emphasis on Wednesday’s price action. To get bullish and position for a countertrend squeeze, we need a price signal for confirmation.
I’m watching 7796—the price dipped below this level in low-volume trade during the night session before reversing back above. It’s only a minor level, but beneath it there’s not much for bulls to hang their hat on until 7600, where buyers stepped in last year.
Depending on the price action around the open at 9:45 am AEDT, if bulls defend 7796 again, the risk of a squeeze increases, similar to what we saw on Tuesday.
Longs could be considered above the level with a stop beneath the session low for protection. 7900 is one potential target, with 7996 and former uptrend support around 30 points higher alternative options for those seeking greater risk-reward.
A clean break and close below 7796 would invalidate the squeeze setup. Unless accompanied by fundamentally bearish news, flipping short after recent declines would be risky.
Potentially working in bulls’ favour, iron ore futures in Singapore had a solid session overnight, lifting nearly 1% to $101.70 per tonne.
Good luck!
DS
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