ASX 200 technical outlook: is the index going to keep rising?

ASX 200 technical outlook – bullish

Australia ASX 200 index’s break above another barrier at the December high of 7375 reasserts the uptrend. This follows the barrier at the August high of 7138 and a hold last year above crucial support on the 200-week moving average. The break above 7138 triggered a double bottom (the June 2022 and the October 2022 lows), pointing to a potential rise toward 7865.

The index has been resilient in the face of tightening of global financial conditions in recent months, approaching its record high compared to some of its peers that have yet to recoup a large part of last year’s losses. Furthermore, the price objective of the bullish double bottom pattern implies a break above the record high of 7633 hits in 2021 to new cycle highs.

ASX 200 weekly chart

In the near term, however, the ASX 200 index is looking overbought as it tests a stiff barrier on a rising trendline from a year ago (see the daily chart). The previous two retreats in the index from the resistance were associated with similar levels of the 14-day Relative Strength Index (RSI). Immediate support is at the December high of 7375.

Any break below would indicate that the short-term upward pressure had faded, pointing to a range developing. However, the medium-term uptrend is unlikely to be at risk while the index holds above the 200-day moving average (now at about 7000).

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