ASX 200 Forecast: Bearish Renko Setup Eyes 8,255 as Gold Miners and Banks Drag

ASX 200 Heat Map: Gold Miners Drag as Newmont and Evolution Slide

Another session, another down day for the ASX 200 Index. On the downside Newmont is down 4.46% and Evolution Mining is down 4.85%. They are doing the damage in the gold mining pocket while BHP (-2.33%), Rio Tinto (-1.45%), Westpac (-2.42%), and ANZ (-2.11%) added some pressure from the heavyweights. The pullback in the Index continues.

This down day seems to be with some capitulation with only 29% of stocks in the ASX 200 Index being above their 20-day MA. A cross back above 30% is a bullish signal for me. We may be finally seeing the end of this pullback.

ASX 200 Heat Map Showing Broad Selling Across Materials and Banks, With Newmont and Evolution Mining Among The Sharpest Large-Cap Decliners

Australia 10-year Yield Holds Above 5%

The Australian 10-year yield is above both its medium and long term moving averages and positive positive momentum recovering. This is observed with the RSI above 50 and the Z-Score SMA trending higher. The short term trend indicator, the Supertrend, is still negative. This needs to flip. But I would lean towards the Australian 10-year yield retesting the 5.175% highs in the short to medium term. These increasing yields wouldn’t do well for equities.

Australia 10-Year Yield 0.025-Brick Renko Showing Yields Holding ABove the 50-SMA and 500-SMA, With RSI at 56.25

ASX 200 Renko Chart Signals Bearish Pressures

The downtrend in the ASX 200 Index continues with the Index seeming to make a lower highland now pushing down to make a lower low. The ASX 200 is below the 50-SMA and 500-SMA and the Supertrend indicator flipped negative. The RSI is below 50 and near oversold territory and the Z-Score SMA is trending lower and not yet near oversold levels.

ASX 200 20-Brick Renko Chart Showing Price Below The 50-SMA and 500-SMA, With RSI Weakening Near 37

The Verdict

Current Trend Direction: Bearish

Bias: Negative

Support Levels: 8,255

Resistance Levels: 8,880, 9,230

Medium Term Path: For the most part the ASX 200 Index is trending lower with the expectation that it will test 8,255 support. One should note the short term market breadth which is currently below 30%. This is an indication that we may be nearing the end of this pullback. But I would still like to see some confirmation. The Index needs to get back above its 50-SMA and 500-SMA on the Renko. From there we would need to see some further rebuilding on the medium term charts for me to be confident enough to change my medium term views on the Index. Until then I see the current trend direction as bearish with a negative tilt.