ASX 200 Forecast: Miners And Banks Lift Market As Falling Yields Ease Pressure

ASX 200 Heat Map: Miners Carry the Tape as REA and IAG Drag

The trading session had resources and banks taking the lead with BHP up 1.1%, Rio Tinto up 1.72%, CBA up 0.94%, Westpac up 0.74%, NAB up 0.50%, and ANZ up 0.51%. The huge movers for the day were South32 (+5.07%) and Evolution Mining (+3.14%). While IAG (-3.4%) and REA Group (-4.07%) were the main laggards on the day. There seems to be copper strength and uranium gains which helped the resources sector.

The ASX 200 Index ended the week up 0.19% with short term market breadth hitting the 50% mark during the trading session. That means half the stocks in the ASX 200 Index are above their 20-day MA. This is a positive sign for the Index in the short term.

ASX 200 Heat Map Showing Broad Strength In Miners And Major Banks, Led By South32 And Evolution Mining, While REA Group and IAG Sit Among the Sharper Losers

Australian 10-Year Yield Breaks Lower as Rate Pressure Eases for ASX 200

Australia 10-year yield continues to push lower as it broke past the 50-SMA between the last 48 and 72 hours. Both the RSI and Z-Score SMA are trending lower and are entering oversold territory. Short term support is observed around the 4.865%-4.925% zone. If yields break below that the next level of short term support is seen at 4.635%. The lower yields should do well for the ASX 200 in the short term, reducing borrowing costs for companies in the near term.

2.5%-Brick Renko Chart Showing Australia’s 10-Year Yield Falling Below the 50-SMA, With RSI Weakening And Z-Score SMA Turning Sharply Negative

ASX 200 Renko Holds Short Term Support But 500-SMA Still Caps The Rally

The ASX 200 Index is inching higher off the 8,480 lows, albeit still below its 500-SMA on the Renko chart. The Index remains above the 50-SMA and the Supertrend flipped positive during the trading session on the 21st. The Z-SMA is still trending higher but nearing overbought territory while the RSI is above 50 but heading lower. The Index just needs some more positive momentum to get back above its 500-SMA.

20-Brick ASX 200 Renko Chart Showing Price Stabilizing Above the 50-SMA While Still Trading Below The 500-SMA Resistance Zone

The Verdict

Current Trend Direction: Bearish

Bias: Negative

Support Levels: 8,255

Resistance Levels: 8,880, 9,230

Medium Term Path: In the short term the bearish trend is trying to repair itself. But it’s not a confirmed bullish reversal just yet. The improvement in banks and miners, the short-term breadth push to 50% and falling Australian 10-year yields all give the ASX 200 Index a better short term backdrop. That helps. But resistance is heavy. First we have the 500-SMA on the Renko and then we have the medium term 8,880 resistance zone. This is a mountainous task for the ASX 200 Index. So we wait on confirmation before making a decision on the change in trend.