ASX 200 Market Outlook: FMG Eyes Breakout, WOW Firms Up

The ASX 200 extended its rebound for a third straight session, shrugging off hotter-than-expected CPI and instead following Wall Street’s lead. The index has now held above both its 200-day SMA and EMA for a second day, though overhead resistance from the June high and September low is tightening the near-term range. Miners and defensives supported the advance, with Industrials pushing to a 16-week high.

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ASX 200 Outlook: Industrials Strength and Miner Momentum

ASX 200 Market Snapshot

• The Australian share market rose for a third straight day despite a hot CPI print, taking its lead from the rebound on Wall Street.
• The ASX 200 has now closed above its 200-day SMA for a second session and marginally above its 200-day EMA today.
• However, resistance emerged around the June high at 8615.2, with the September low at 8731 also nearby as a potential barrier.
• Eight of the eleven ASX sectors advanced, led by Materials (XMJ), Health Care (XHJ) and Consumer Discretionary (XDJ), while Technology (XIJ) and Communication Services (XTJ) were among the three sectors that finished lower.
• The Industrials index (XNJ) climbed to a 16-week high.

Chart analysis by Matt Simpson - source: ASX, LSEG

Woolworths (WOW) Technical Analysis:

I first highlighted the potential for Woolworths (WOW) to rally from oversold levels on 22 October, off a bullish engulfing week above the March 2020 low and a small bull flag on the daily chart. Since then, WOW has reached the 28 target near the September high and moved into a multi-week consolidation. Recent price action now hints at a possible next leg higher.

The daily chart shows WOW has repeatedly respected the gap-support zone after completing a potential three-wave pullback within its range. A triple bottom formed within a bull flat, alongside a rickshaw man doji on Tuesday, before prices gapped higher today.

My bias stays bullish while WOW holds above the recent swing lows, with scope for at least a move towards 29. A break above that level brings the gap-resistance high at 29.80 into view for bulls.

Chart analysis by Matt Simpson - Source: ASX, TradingView

Fortescue (FMG) Technical Analysis

I renewed my bullish bias on Fortescue last week, and FMG is now on the brink of a potential breakout. It exceeded an earlier bullish target at the end of October before a shallow pullback, but momentum has returned and the stock is now eyeing a move above 21.50.

FMG led the mega-cap miners on Wednesday, rising 2.4% on above-average volume. BHP Group (BHP) climbed just under 2%, Rio Tinto (RIO) gained 1.9%, and Northern Star Resources (NST) added 1.8%.

BHP has now risen 4% from its 200-day EMA and looks set to challenge the 43.45 high. RIO is also worth watching for a breakout above 135.24. While NST sits near cycle highs, its price action remains messy and lacks the cleaner bullish signals I typically look for during breakout setups.

Chart analysis by Matt Simpson - Source: ASX, TradingView

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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