ASX200 Potential Bull Flag Leading Into RBA Meeting

The ASX200 is trading in a tight consolidation pattern ahead of today’s RBA meeting. If they deliver with a dovish cut (or comments from the governor) we’d expect it to break to new highs.

Since the GFC, the ASX200 has followed the global trend of rallying in a low interest environment. However, unlike its US counterpart, the ASX200 has not yet broken above its pre-crash highs but it is indeed getting close to this milestone level. If further cuts are signalled today, we’d expect the index to break to a new cycle high.

Markets are pricing in a 78% chance of a rate cut today, and that we see the ASX200 resisting any temptation to break higher ahead of the decision suggests we likely need a dovish cut for bulls to extend the rally.

We can see on the daily chart that the index is trading within a potential bullish flag formation, just off its highs. Price action is bouncing along the short-term moving averages to show a pick-up of momentum, and now trades just 2.78% from its all-time high.

A break above 6,700 assumes trend continuation and for a run for 6,800 and the all-time high
However, such a milestone level is an obvious area to book profits so we’d expect a price reaction around here
If RBA surprise with a natural cut, we could see prices correct before heading higher.
However, the dominant trend remains bullish above 6,315, so we’d reconsider bullish setups if a new level of support is found above this low.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.