Current trend

The leading index of the Australian economy, the ASX 200, is showing corrective dynamics at 7767.0 against the backdrop of the situation on the domestic bond market, as well as negative statistics.

Thus, Gross Domestic Product (GDP) in the first quarter grew by only 0.1% after 0.3% earlier, with expectations of 0.2%, and the annual figure adjusted to 1.1% from 1.6%, while analysts expected 1.2%. One of the key factors behind the negative dynamics was the fall in business activity in key sectors: the Construction PMI dropped to –68.1 points from –25.6 points, and the Manufacturing PMI — to –31.1 points from –13.9 points, confirming that by this fall the economy could be in recession, putting pressure on the stock market.

The ASX 200 is supported by a correction in the bond market: 10-year bonds are trading at a rate of 4.287% after 4.418% recorded a week earlier, the yield on 20-year bonds fell to 4.675% from 4.822%, and the 30-year bond rate dropped to 4.650% from 4.763%.

The growth leaders in the index are Zip Co., Ltd. ( 6.28%), Treasury Wine Estates Ltd. ( 5.09%), Seek Ltd. ( 4.94%), Nanosonics Ltd. ( 4.66%).

Among the leaders of the decline are Alumina Ltd. (–4.68%), Xero Ltd. (–4.47%), Mesoblast Ltd. (–3.56%), Whitehaven Coal Ltd. (–3.96%).

Support and resistance

On the daily chart, the price is held within the channel 8100.0–7600.0, being slightly above the support line.

Technical indicators have almost reversed and issued a new sell signal: fast EMAs on the Alligator indicator are held at the signal line, and the AO histogram is forming corrective bars, being close to the transition level.

Support levels: 7700.0, 7580.0.

Resistance levels: 7810.0, 7925.0.

Trading tips

If the asset reverses and declines with the price consolidating below 7700.0, short positions can be opened with the target at 7580.0. Stop-loss — 7750.0. Implementation time: 7 days and more.

If the asset continues growing, and the price consolidates above the resistance at 7810.0, long positions with a target of 7925.0 and stop-loss of 7760.0 will be relevant.