ASX (AUS200)- SELL – 7th February

ASX (AUS200)- SELL – 7th February (Closed)

Good morning Forex Kings,

Later this evening we will be looking at the US Non-Farm Payroll, however this morning we are focusing on the Asian market as the corona-virus is coming back into the forefront.

Corona Virus: What is going on?

Corona virus reported cases reaches 30,814 with 635 fatalities. The death toll now reaching roughly 2% of reported cases. There are an additional 24,702 suspected cases and 4,664 people in a critical condition. 

Overnight news emerged a doctor aged 30 who had been treating corona-virus victims, passed away from the virus. 

There is currently mass quarantine across at least 6 Chinese cities, people can not leave their homes but once in three days. The city of Wuhan is under wartime conditions as officials round up corona virus victims and take them to quarantine camps.

A cruise ship docked in Japan is under quarantine as another 10 passengers test positive for the corona-virus. The cruise ship currently has 3700 passengers who are not aloud to leave the ship due to quarantine.

Taiwan banned all international cruise ships from docking on the island. One ship it turned away is now docked in Hong Kong, where three passengers on board have symptoms of the virus. 

A rising number of American citizens are being put into quarantine. Two more flights evacuating Americans from Wuhan has been taken to a military base in Riverside, Calif, it is estimated roughly 500 passengers will remain in the camp for at least 14 days. 

Airliners across the globe have cancelled more than 50,000 flights going to and from China. The country is the worlds second largest aviation market after the US. 

China is considered the ‘workshop’ of the world, and it is estimated roughly 80% of its manufacturing industry is closed. The Chinese economy is 17% of the world economy and deeply integrated into international supply chains. 

If the quarantine and virus persists for much longer, we could see a huge disruption to global corporate earnings and the global economy. The only shares to potentially benefit during this time are pharmaceutical stocks.

The breakdown in China will also have a negative impact on Australian stocks, paired with the devastating bushfires which are currently still burning. 

Technical Analysis

Technically this looks ripe for a large pull back as the RSI turns bearish.

ASX – 1 Hour Time Frame

Technically speaking there has been a series of lower lows and lower highs. We could be looking at a breakout of a bear flag.

We will now be looking too short the index with a high risk to reward.

Both the fundamentals and technical analysis support this position. 

Trade Set Up: SELL AUS200 (ASX) market order, stop loss 7120, take profit 6870

Stop loss: 96

Take Profit: 154

Trade Setup
SELL

Entry
7024

Take Profit
6870

Stop Loss
7120