Sellers in Control as 50DMA Rejection Reinforces Bearish Bias

Australian ASX 200 SPI futures were firmly rejected at the 50-day moving average earlier Friday, reinforcing the message that sellers remain in control following the bearish break of uptrend support flagged earlier this week.

With RSI (14) and MACD both firmly bearish, the near-term bias remains to sell rallies and downside breaks.

If the price squeezes back toward the 50DMA, it could present a short setup, allowing for positions to be established beneath the level with a stop above for protection. Ideally, another test and failure at the 50DMA would bolster the merits of the trade. Potential targets include 8251, 8135, or the key 200DMA.

Alternatively, a clean downside break of 8251 could open the door for shorts beneath that level, again with a stop above. Targets would be the same as the latter two mentioned above.

Beyond technicals, there’s been little discussion about how the sharp rally in Chinese equities is impacting markets outside of China. For years, investors wary of direct exposure to China gained access indirectly through other Asian markets, including the ASX. With China now looking far more investable, this shift—beyond earnings season—may help explain the abrupt weakness in Australian equities.

Good luck!
DS