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ASX 200 Forecast: Tech Strength Supports Recovery as Bank Yield Appeal Fades
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Key Points:
- The ASX 200 remains resilient, with technology stocks continuing to offset weakness in the major banks.
- Dividend yield compression is becoming harder to ignore, with the ASX 200 yield near 3.3%, while some term deposits offer around 4.20% and CBA’s cash yield remains relatively low.
- Reports of renewed diplomatic engagement involving US-Iran talks have helped support broader risk sentiment and kept traders focused on a softer geopolitical risk premium.
Risk sentiment remains resilient. Even with the Strait of Hormuz still central to the global market narrative and fuel prices weighing on domestic confidence, equities have continued to hold up reasonably well. Comments from former President Donald Trump suggesting Tehran had accepted almost everything helped lift U.S. futures, while reports pointing to Pakistani involvement in reviving dialogue added to hopes of a diplomatic off-ramp.
That said, the backdrop is still delicate. Higher energy costs continue to cloud the outlook for inflation and growth, and RBA Deputy Governor Andrew Hauser’s warning about a stagflation-style shock remains relevant. If energy prices stay elevated, the RBA may have limited flexibility around the current 4.10% cash rate, leaving markets sensitive to any deterioration in growth data or inflation expectations.
Weekly Supertrend Still Supports the Broader Uptrend
The weekly chart continues to show a market that has absorbed a difficult mix of macro and geopolitical pressure without breaking down. Price is now approaching resistance around 9,228.9, an area that has capped upside progress for several months. Even so, the ability of buyers to defend pullbacks through repeated periods of uncertainty points to underlying demand that remains constructive.
ASX 200 Weekly Chart Climbing Towards Resistance
Weekly ASX 200 candlestick chart showing Supertrend support and resistance. Source: TradingView
Daily 21-EMA Remains the Key Short-Term Floor
On the daily chart, the rebound from the 8,255 pivot has been technically clean. Price has reclaimed the 21-day EMA, and that level is becoming the key short-term support for the current advance.
Momentum also remains firm, with RSI above 60, which suggests improving strength without yet entering an overextended zone. There are still pockets of instability beneath the surface, particularly in higher-beta names, but as long as the index continues to close above the 21-EMA, the near-term structure remains supportive.
ASX 200 Daily Chart Shows Recovery
ASX 200 daily chart shows recovery above the 21-EMA. Source: TradingView
Renko Values Top of Range
The 11-brick traditional Renko chart reinforces the improving tone. It shows a sustained sequence of green continuation bricks from the end of March lows, highlighting persistent buying pressure during the recovery phase.
After having moved substantially above the 500 SMA, the price has been a bit rangebound and is not testing the top of the range. The Z-Score SMA is close to 2 which indicates that the bull move is still extended. There may be a pullback before a resumption of the overall uptrend for the Index.
ASX 200’s Renko is at Top of the Range
Key Resistance Levels: 9,230
Medium-Term Path: I expect the ASX 200 to continue working toward the 9,230 resistance zone, supported by relative strength in the technology sector and a moderation in the geopolitical risk premium. Bank yield compression may remain a headwind for parts of the index, but miners and growth-sensitive sectors are helping to balance that weakness. The key near-term test is whether the index can continue to hold above the 21-day EMA. If it does, the broader recovery has room to extend and a retest of the highs comes back into view.
About the Author
Cedric Thompsonauthor
Cedric Thompson, CMT, CFA, is an investment strategist with experience in asset management, corporate strategy, and multi-asset investing.
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