ASX 200 Forecast: Miners Drag Index Despite Positive Balance of Trade

Miners and Growth Names Drag The Tape

There’s a sea of red during this trading session. BHP is down 3.25%, Rio Tinto is down 3.29% and Fortescue is down 4.11%. The miners are pulling the Index down hard. We see that the banks are also soft with CBA, WBC, NAB and ANZ all red. With the major downside there’s XYZ which is down 6.42% and Northern Star Resources which is down 6.08%.

A big down day for the ASX 200 Index, it declined over 1%. Market Breadth is still slightly positive with only 51% of stocks in the ASX 200 Index being above their 20-day SMA.

ASX 200 Heat Map Showing Heavy Selling In Miners, Banks And Select Growth Stocks

Trade Surplus Returns But Didn’t Help The Index

Australia’s trade balance moved back into surplus at A$1.791B, in line with the A$1.8B forecast. But what’s more important is that it moved into a surplus as the prior reading was a A$1.024B deficit. Exports improved, helping the trade balance. Nonetheless this didn’t help the price action as the Index was down over 1%. Still, the medium term economic picture has improved as seen by this data point.

Australia’s Trade Balance Swings Back Into Surplus After Prior Deficit

Rate Pressure Hasn’t Gone Away

Indeed, Australian yields remain elevated as seen by the 10-year yield. It has formed a base and is inching higher, pressing against the slightly downward sloping 21-EMA. Once it breaks above that, the next level of resistance is the negative Supertrend line as well as the 50-SMA, which are positioned closely next to each other. The momentum is there, so my expectations are for a retest to the 5% level at least. Not sure whether that yield would hold for the Australian 10-year though.

Australian 10-Year Yield Rebounds Toward 4.93%

ASX 200 Index Renko Dragging Higher

I’m seeing higher highs and higher lows after that double bottom in mid May. The ASX 200 Index Renko bricks are back above its long term 500-SMA. It’s also above the 21-EMA and 50-SMA. The RSI is above 50 and moving higher while the Z-Score SMA is beginning to turn higher for the Index on this Renko chart. So the positive momentum is rebuilding. What really needs to happen now is for the Supertrend to flip back positive and for the Index to break through that 8,800 resistance level.

ASX 200 20-Brick Renko Shows Price Holding Near The MAs

Current Trend Direction: Bearish

Bias: Negative

Support Levels: 8,255

Resistance Levels: 8,800, 9,230

Medium Term Path: For me what needs to happen for me to change my view on the ASX 200 Index is the key 8,800. The Index needs to have a weekly close above that level. Then things get a bit clearer. But for now the current trend direction remains bearish with a negative bias.