ASX 200 at Critical Levels | Bear Returning? | Episode 111

By Jason McIntosh | Published 24 February 2023

Trade the Trend is a weekly video focusing on where the stock market is going. It’s for investors and traders looking for technical analysis of the ASX stocks, the ASX200, the SP500, as well as stock markets and commodities markets in general. Jason uses technical analysis of stocks and trend following techniques to help you piece together the world’s biggest puzzle.

Where is the Stock Market Heading?

00:00 Intro

00:30 Is the ASX 200 correcting or breaking down?

03:42 Look for “buy the dip” to happen here

05:07 Is this the time to buy gold?

06:15 Watch this key level in copper

07:04 Uranium hits resistance (what next?)

08:17 Bitcoin presents an interesting set-up

Keypoints from the video are

• The ASX 200 is experiencing a pullback that looks corrective and proportional to the run-up from January to February.
• The ASX 200 is currently in the middle of the Fibonacci retracement region, and between the 50-day and 100-day moving averages, suggesting that it is starting to look a little bit stretched on the downside.
• Signs of buy the dip for accumulation on the pullback may provide clues as to whether the market will form some sort of a base before having an attempt at breaking above the triple top resistance at around 7600.
• The ASX equal-weighted index is showing similar price action to the recent price action in the ASX 200, which may suggest that buy the dip will come in.
• Gold has lost a little bit of ground, but it’s largely moved sideways over the last week, sitting on the 100-day moving average, and has come back up into the upper regions of the Fibonacci pullback zone.

Transcript

Please note: Charts available from video

This video is going to focus on the ASX 200. I’m also going to have a look at gold, copper, and uranium, so make sure you stick around for that. I’m going to leave my coverage of the S&P 500 in a separate video, and I’ll leave a link for that in the description section below. As always, this is general commentary. It doesn’t take your personal situation into account. With all of that said, let’s get into our first chart.

So, we’ve got the ASX 200 up on the screen. And it’s a case of the pullback continues. The pullback that we’ve been speaking about over the last few weeks has continued since this time last week when I did my last video. And it’s not really a great surprise because this is something that we have spoke about, and it’s typical that you get these pullbacks after these strong runs. There’s such a strong run in the ASX 200 from the January low through to the high in February. And so far, the pullback, it’s looking corrective, it’s looking proportional to the run-up.

I’ve got the Fibonacci retracement region on here. So, the Fibonacci retracement region is using the low point from January and the recent high point in February. And we’re now right in the middle of that Fibonacci retracement. And we’re also in between the 50-day, the 100-day moving averages. So, as it stands, I think this looks…so far looks corrective. If anything, I’d say the ASX 200 is starting to look a little bit stretched on the downside. And we could be nearing a point we do get a rally, we do get a bounce off this what would really be a support region. Fibonaccis and moving averages often provide support for markets and do get rebounds. So, I think that’s becoming quite a good possibility maybe for the coming week that we see that activity begin.

And we also want to watch for signs of buy the dip for accumulation on the pullback to give us clues as to whether the market will form some sort of a base before having an attempt at breaking above this triple top resistance which has been in place for some time now at around 7600. But that’s a bit away at the moment. At the moment, it’s focusing on what’s happening. Is this a pullback? Is this indeed a pullback that will establish support, or is it something else? Is it something where the market does continue to roll over and head lower? At this point, they’re not the indications that I’m seeing on this chart. But we do, of course, as always, need to watch how the price action unfolds.

And as I said last week, I think this could still take time to play out. I think we can be patient in both stocks we buy and also in selling. If stocks are just trading sideways, I don’t think there’s a hurry to exit them. It’s about exiting the stocks which are falling away but also just waiting for the right setups, waiting for the right opportunities, and not being in a hurry to buy stocks which don’t really stack up with the market in this corrective phase.

Now, let’s have a quick look at the ASX equal-weighted index. Now, this is what we’re seeing in the equal-weighted index. It’s quite similar price action to the recent price action in the ASX 200 in that it got to a resistance point at around 1800, been pulling back, it’s pulled back to these moving averages, back to the 100-day moving average. We can also put the Fibonaccis on that last leg of the rally. And again, it’s back into the Fibonacci region. So, again, this is where we’d expect buy the dip to come in if that’s going to come in. So, that’s what we want to look for now. Is this pullback going to find support and accumulation? Is buy the dip going to happen? So, let’s continue to watch this and let’s see how this price action plays out over the week.

Now, if you’re getting some value from this, please hit that like button. Please leave a short comment, just, “Hey, thanks for the video.” It just tells YouTube that people are watching, people are engaging, then YouTube does what it does and goes and shows more people, which helps me heaps. And also come and visit me over at Motion Trader and see the work I’m doing with trend identification and using algorithms to find stocks amongst the ASX 2000-odd stocks, seeing whether that could help with what you are doing with your portfolio.

Now, let’s move on to some commodities. So, I want to have a quick look at gold. Not a lot has changed from last week in gold. The pullback has continued to… Gold’s continued to lose a little bit of ground. Hasn’t actually lost much. It’s pretty much moved sideways largely over the last week, sitting on the 100-day moving average. We can also put on some Fibonaccis of that run up from the lows in October. And you can see the gold’s come… It’s now back up into the upper regions of the Fibonacci pullback zone. So, again, very natural place for this to come back to. It’s just nothing. I don’t think there’s anything to be in a hurry about to do with gold at the moment. This was a big rally from the October lows through to the highs, 20% in 3 months. It’s just going to take time. I think it’s going to take time to consolidate. And I think we want to wait for upward momentum before considering getting into the gold stocks.

Just coming over, a quick look at copper. Again, not much change from last week. We have a market which looks to be consolidating sideways following a break out above four dollars in January. Maybe it’s a case that the market does what it did during November into January, through November and December, and just trade sideways in some sort of a range. Coming back to these moving averages, the overall picture in copper, it looks encouraging. It looks like copper could continue to rally from here, but let’s just see whether it continues to hold support around four dollars and support around [inaudible 00:07:03].

And just lastly a look at uranium. Last week, we were talking about there was some resistance on the uranium chart up at around the 1750 region. We do have a pullback towards these moving averages. So, I think again, just like with gold and copper and the All Ordinaries generally, I don’t think there’s a hurry to do a whole lot of things at the moment. It’s wait for the right opportunity, wait for the breakouts. If you got markets trading just below resistance, it’s probably not the ideal setup for buying. It’s a case of waiting for those breakouts to break to the top side, hopefully, in uranium. But we need to wait and see. This consolidation, as I spoke about a few weeks ago, it could continue to… Uranium could continue to meander through this large range for several more months, many more months. We don’t know. We just need to keep monitoring. I think I’ll continue to want to play this from the upside but just waiting for the breaks and waiting for the right price action.

So, one more thing before we go, just quickly. Bitcoin. I don’t usually talk about Bitcoin, but nonetheless, it’s a market. I know some people are interested in it, and it’s one which I do watch, even though I don’t really talk about it much. Just interesting from a price action perspective. We had this. You can see these blue lines, that being the resistance, being support, big trading range Bitcoin was in from around June 2022. Had a breakdown in November. And you get a breakdown from a trading range, and that can set the market up for another extended leg lower. That didn’t happen.

And interestingly, gold did something similar around November. It broke down from a trading range, sat beneath the range, and then popped back up. Bitcoin didn’t break down. Instead, it broke back into the range in January. It’s now made its way back up towards the top of the range. And it just looks here to be consolidating below resistance. Moving averages are now rising. It’s going to be interesting to watch. So, this isn’t a market which I’m playing, but as I say, it’s one which I watch. I just like price action. Interesting to see whether Bitcoin breaks above resistance at around 25,000 and goes for another run. So, if you’re a crypto person, here’s something to keep an eye on. Keep an eye on that 25,000 region. That’s a bit of a resistance point. If it does break there, it could be another run in the cryptos. So, anyway, enough said about the crypto market.

Hopefully, that’s been interesting. Let’s leave it there for this week. Thank you for joining me. I look forward to coming back and talking to you next week. Until then, bye for now.

Please see video for more detailed analysis and charts

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