The ASX 200 continues to underperform global peers, with narrow gains masking growing internal divergence. While Materials pushed to fresh highs and Industrials hinted at near-term stabilisation, weakness in Energy and broader index price action suggest upside momentum remains fragile as traders assess RBA risks and broader global sentiment.
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ASX 200 Outlook: Momentum Falters as Key Levels Loom
ASX 200 Market Snapshot
- While 137 ASX 200 stocks (65.5%) advanced on Wednesday, the index rose just 0.15% by the close
- The Materials sector (XMJ) rose for a third consecutive session to print a fresh record high, leading eight ASX sectors higher on the day, while three sectors declined — led by Energy (XEJ)
- Lower crude oil prices saw the ASX Energy sector suffer its worst session in 30 trading days
- The day’s high met resistance near the September low (8731.3) and closed near the lows of Tuesday’s bearish engulfing candle, suggesting bulls may be running out of ideas
- A bullish engulfing candle formed above the September low on the ASX Industrials index (XNJ), while Qantas Airways (QAN) and Brambles (BXB) hint at swing lows and ALS eyes a potential bullish breakout
- The Australian share market has also failed to rise alongside Wall Street peers, raising questions over whether the rally from the November low has already run its course after topping in late December
Chart analysis by Matt Simpson - source: ASX, LSEG
ASX Industrials Signal a Near-Term Base
The bullish engulfing day for the ASX Industrials index on Wednesday formed at its 200-day SMA and September low. While this does not guarantee a strong rally, it is at least a cautionary tale for bears and suggests bulls may begin to seek bullish setups across some sector stocks.
Brambles (BXB) remains within a bearish channel, although prices are holding above the lower trendline and have closed back above the August low. A bullish mean-reversion move towards the 20-day EMA, the $30 handle, or even the 50-day EMA could be on the horizon.
Qantas (QAN) formed a bullish engulfing candle at the 20- and 50-day EMAs. While the uptrend is not particularly strong, price action continues to grind higher on the daily chart, and Wednesday’s move hints at an interim swing low.
ALS (ALQ) is hinting at a bullish breakout. The stock remains firmly within a broader uptrend, with a potential inverted head-and-shoulders pattern forming — typically a continuation pattern during a trend.
Chart analysis by Matt Simpson - source: ASX, TradingView
ASX 200 Technical Analysis
The Australian share market continues to lag Wall Street and, despite rebounding from its November low, remains well below record highs. Expectations that the RBA may hold rates higher for longer — and the small but non-zero risk of a hike — continue to dampen risk appetite. Should global risk sentiment deteriorate, the ASX appears vulnerable to underperform US equities.
ASX 200 futures are holding above the monthly pivot point for now, although Tuesday’s bearish engulfing candle warns of a fragile market. Wednesday’s inverted hammer allowed for a modest bounce, but bears may look to fade minor rallies below the 8,800 handle, near the monthly R1 pivot and November VPOC.
Chart analysis by Matt Simpson - Source: TradingView, ASX SPI 200 Index Futures
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-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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