The ASX 200 index erased earlier losses after bank earnings upgrade by Macquarie and strong Australian retail sales numbers. The index, which tracks the biggest Australian companies, rose to $6,956, which was substantially higher than the intraday low of $6,893.
What happened: The ASX 200 index has been under intense pressure. This week alone, it has dropped by almost 2%, in part, because of the overall weakness in global stocks. Indeed, in the United States, the Dow Jones and S&P 500 indices have also been struggling. The ASX rebounded today after data by the Australian Bureau of Statistics (ABS) showed that retail sales rebounded in March.
Also, a bullish report by Macquarie boosted confidence in the banking sector. The cimpny said that it expects ANZ earnings per share to rise by 1.9% while Commonwealth Bank’s earnings will rise by 0.4%. It also expects similar gains by Westpac and NAB. The ASX 200 index also recovered after the relatively strong update by BHP.
ASX 200 forecast
The ASX 200 index declined to a low of S6,895, which was the lowest level since April 7. On the four-hour chart, the index then bounced back to slightly below the 23.6% Fibonacci retracement level at $6,990. It has also moved between the 50-day and 100-day exponential moving averages.
Notably, the index seems to be forming a head and shoulders pattern, which is usually a negative sign in technical analysis. Therefore, in my view, the index will resume the downward trend as bears target the 50% retracement at $6,875. However, a move above $6,990 will invalidate this prediction.
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S&PASX 200 Chart
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