ASX 200 Forecast: Fragile Relief Rally Faces 8,915 Resistance as Tech Stocks Slide

The ASX 200 managed to finish marginally higher, but the move still feels very fragile with bad breadth, tech selling, and the Index being below the Renko MAs. Today financials and miners are holding the line, but it still looks like a relief rally more than anything.

ASX 200 Heat Map Shows Banks and Insurers Offsetting Tech Pain

There’s some green in the financials during the Australian equity market session. Macquarie (MQG) was up 3.2% and IAG also increased 3.68%. On the other end tech got a bit of a rout with XERO (XRO) down 9.04% after the market punished weaker profit and Melio integration costs, even with revenue growth and a buyback in the mix. WiseTech (WTC) around -4.8% also keeps bleeding as investors reassess the growth story while REA -5.71% looks caught in the property-policy crossfire after budget changes to negative gearing and capital gains tax. Block (XYZ) -3.61% adds more pressure from the payments/fintech corner.

The ASX 200 Index still has a wall of worry to climb. It ended the session up marginally. Market breadth is still around 40% which isn’t a very good sign. So the bias for the index is still tilted on the negative side.

ASX 200 Heat Map Highlights Macquarie, IAG and Xero as the Movers

20-Brick Renko shows ASX 200 rebounding into SMA Resistance

I increased the brick size on the ASX 200 Index chart to 20 bricks to help reduce the whipsaws I’ve been seeing. So now it looks like a dead cat bounce on the Index. It’s held at the 8,600 level. For now. There are several positive caveats. The ASX 200’s Supertrend has flipped green, the RSI is above 50 and the Z-Score SMA is trending higher from depressed levels.

But the Index is still below its 50-SMA and 500-SMA. Hopefully there’s enough momentum to carry it back above those thresholds. From there the ASX 200 needs to hold the 8,915 level.

20-Brick Renko Shows ASX 200 Rebounding into SMA Resistance

The Verdict

Current Trend Direction: Bearish

Bias: Negative

Support Levels: 8,255

Resistance Levels: 8,915, 9,230

Medium Term Path: The short term bounce on the ASX 200 doesn’t really mean anything until it can get back above both the 50-SMA and 500-SMA. 40% market breadth isn’t helping the situation either. Thus the path for the ASX is still lower. Hopefully the Index can find some support around the 8,255 level.