The ASX 200 has regained its footing after its recent selloff, but the rebound looks weak compared with the surge across Wall Street. With SPI 200 futures struggling around 8800 resistance and hawkish RBA risks lingering, the index remains vulnerable to another leg lower.
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ASX 200 Remains Vulnerable Despite Rebound
Despite the fact that the ASX 200 has had a volatile range over the past year, it finds itself down -2.5% from last September’s close. And with the shooting star reversal and false break of its prior record high in August, it looks like the ASX may want to retrace further into that volatile 1-year range.
Still, with Wall Street rebounding on great strength, it has helped the ASX regain its footing. But the fact it is struggling to rally at all suggests it remains vulnerable to risk-off sentiment, or any data that fuels the fire for a hawkish RBA next week.
Source: ASX, TradingView
ASX Tracks the Dow as Nasdaq and S&P 500 Surge
If we compare the ASX to Wall Street, it is clearly has more in common with the underperforming Down Jones. The DJI cash market chart on the bottom right shows its pullback has found support just above 51k, yet has seen a feeble attempt at catching up with its bullish peers. The Nasdaq and S&P 500 meanwhile have seen gaps higher within the rally to show strength behind the move – with an element of FOMO.
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ASX 200 Technical Analysis
The daily chart shows the SPI 200 (ASX 200 futures market) has retraced higher, but found resistance around its 200-day EMA, monthly S1 pivot and the 8800 handle. The fact that we have seen a series of upper and lower spikes while the open-to-close ranges remain narrow shows just how choppy and indecisive conditions are. And when you consider this has occurred despite a strong rally on Wall Street, even a small bout of global risk-off could destabilise the ASX further.
Bears Eye Resistance Around 8850
Bears could seek to fade into moves around current levels, or near the monthly VWAP and weekly R1 around 8850 for additional resistance. But if prices somehow break higher, the 8900 area is the next level of resistance near the 50-day EMA and swing low for bears to consider. Until a domestic catalyst worthy of a rally arrives, however, a move down to 8500 or even 8400 may be on the cards.
Source: ASX, TradingView
