ASX 200 Outlook: ASX Holding December Lows as Bounce Setup Forms

The ASX 200 remains under pressure after several days of losses, but technical signals suggest sellers may be losing momentum. The index continues to hold above the December low while momentum indicators hint that a near-term inflection point could be forming.

Options positioning also highlights the 8,600 region as an area where price may stabilise. If support continues to hold and global risk sentiment steadies, traders may begin to look for a modest bounce in the Australian share market.

View related analysis:

ASX 200 Holds December Support as Bounce Risks Begin to Build

ASX 200 Market Snapshot

The ASX 200 closed lower for a third consecutive day, in line with last week’s near-term bearish bias.
Six of the 11 sectors advanced, led by consumer staples (XSJ) and utilities (XUJ), while five declined, led by materials (XMJ) and technology (XIJ).
We’re halfway through the month and energy (XEJ) is the only sector posting gains, supported by higher oil prices stemming from the war in Iran.
Implied volatility remains elevated, although bearish momentum is beginning to fade and I’m now seeking at least a minor bounce for the Australian share market over the near term.

Source: ASX, LSEG

ASX 200 Technical Analysis

Options Positioning Suggests 8,600 Is the Key Battleground

The daily ASX cash market (left) shows prices fell for a third day after meeting resistance around the 200-day SMA. However, bearish momentum is already waning and the local share market continues to hold above the December low. A bullish divergence has also formed on the daily RSI (2), warning of a near-term inflection point.

The SPI 200 (ASX 200 futures) chart shows a wide-legged doji formed on Friday, which respected the December low as support without prices testing the 8,500 handle. Given prices have so far held above Friday’s low and Wall Street futures rebounded from last week’s lows, I am now seeking a cheeky bounce on the ASX 200.

Options positioning shows the largest concentration of open interest around 8,600, creating a potential gamma “magnet” where price may stabilise or trade sideways.
Above the market, 8,700 emerges as the first upside ceiling, where rallies may struggle unless buyers can force acceptance above the level.
On the downside, 8,500 is the nearest gamma floor, where strong put positioning could slow declines if the selloff continues.

Source: ASX, ASX24, TradingView

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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