ASX 200 Technical Outlook: Index Pulls Back as Bears Eye Support

ASX 200 (Australian 200 Index) at a Glance

The ASX 200 cash index snapped a 7-day winning streak on Monday, marking the end of its best run since September
All 11 ASX 200 sectors closed lower, led by energy and financials
123 ASX 200 stocks declined, 56 advanced, 2 were flat
ASX 200 futures (SPI 200) were -21 points lower overnight, indicating a weak open for the ASX cash market today

ASX 200 Index Futures (Australian 200 Index) Technical Analysis

ASX bulls have enjoyed a 15.5% rally over the past 18 trading days, from the April low to Monday’s high. In fact, the ASX 200 has just recorded its strongest three-week rally since November 2020. However, Monday’s -0.9% decline marked its worst daily loss in nearly three weeks and may signal a potential change in character for this leg of the rally.

ASX 200 futures also formed a two-bar bearish reversal pattern known as a dark cloud cover, which closed back beneath the 200-day SMA (simple moving average). Meanwhile, the daily RSI (2) has developed a bearish divergence in overbought territory and closed below 50—an early warning sign of waning momentum. Perhaps we’re finally about to see the pullback I had anticipated last week.

For today, bears may seek a move to retest the 200-day EMA (exponential moving average) at 8106.
Note potential support levels around the December low (8045) and March high (8070) if prices break beneath 8100.
A move below 8045 could see the ASX 200 head towards the weekly VPOC (volume point of control) at 7939.

Economic Events in Focus (AEST / GMT+10)

Public holiday in Japan, South Korea

11:00 – New Zealand commodity price index (ANZ)
11:30 – Australian building approvals
11:45 – Chinese services PMI (Caixin)
15:45 – Swiss unemployment
17:35 – Swiss National Bank (SNB) Vice Chairman Schlegel Speaks
18:00 – EU HCOB Eurozone Composite PMI (Apr)
18:30 – UK S&P Global Composite PMI (Apr)
19:00 – EU PPI (MoM) (Mar)
22:30 – Canadian trade balance (Mar)
00:00 – Canadian Ivey PMI (Apr)

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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