ASX 200 Morning Market Outlook: ASX Snaps 5-Month Winning Streak

The ASX 200 looks set to snap a five-month winning streak — its longest since August 2021. While that episode led to a 16% correction over the following year, this time the setup is more nuanced. The index has lagged global peers such as the S&P 500 and Dow Jones over the past 60 sessions, and end-of-month flows have produced a shooting star candle to warn of near-term weakness. Yet, strong dip-buying interest suggests bulls remain active, with traders now weighing whether consolidation will resolve in a breakout or deeper retracement.

 

ASX 200 Market Snapshot: Weakness Emerges After Five-Month Rally

• The ASX 200 is on track to snap a five-month winning streak, its longest since August 2021.
• Back then, the index went on to suffer a 16% correction over the following year — whether history repeats or merely rhymes remains to be seen.
• Over the past 60 trading days, the ASX 200 has clearly underperformed global peers such as the Dow Jones and S&P 500.
• End-of-month flows left the ASX 200 cash index with a shooting star candle, signalling potential near-term weakness.
• Nine of eleven sectors declined on Monday, led by Energy and Telecoms, while Materials and Industrials were the only gainers.

 

Charts prepared by Matt Simpson - data source: ASX, LSEG

 

 

ASX 200 Technical Analysis

The daily chart shows the ASX 200 trading in a sideways range between ~8750 and 8900 over the past month. Initially, I considered this consolidation to be a choppy wave ‘b’ that required a leg ‘c’ lower. However, the index has held up well, suggesting buyers are willing to step in on dips in anticipation of a bullish breakout. I am now leaning toward the latter scenario.

Monday’s rally into resistance was impressive, and I suspect bulls view the current, albeit shallow, pullback as simply that — a pause within a move that wants to push higher.

On the 4-hour chart, the ASX is holding around a high-volume node (HVN) and trades just above the weekly pivot point (8832). Unless risk appetite turns sharply lower, I am inclined to seek evidence of a swing low, with the expectation of at least a retest of the range highs — and potentially a breakout for pre-emptive bulls.

Chart analysis by Matt Simpson - Source: TradingView, ASX SPI 200 Index Futures

 

 

Global Index Futures and Asian Market Moves

Asian Indices:

• ASX 200: Fell by -14 points (-0.16%) and currently trades at 8,848.80
• Nikkei 225: Rose by 121.28 points (0.33%) and currently trades at 36,668.23
• Hang Seng: Rose by 232.68 points (0.87%) and currently trades at 26,855.56
• China A50: Fell by -46.7 points (-0.31%) and currently trades at 15,142.31

US index futures:

• Dow Jones Futures: Down -66 points (-0.14%)
• S&P 500 Futures: Down -8.75 points (-0.13%)
• Nasdaq 100 Futures: Down -20.5 points (-0.08%)

 

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge