ASX 200 Under Pressure: Key Levels For Investors to Watch | Episode 278

By Jason McIntosh | 10 January 2025

The Australian share market is off to an uncertain start in 2025. While 2024 was marked by strong upward trends across major indices like the ASX 200, S&P 500, and NASDAQ, January appears to be shaping up as the month of crosscurrents.

Here’s an in-depth look at the current state of the ASX 200, key levels to watch, and strategies for managing this evolving market environment.

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ASX 200: Still in an Uptrend, but Under Pressure

The ASX 200 remains in an overall uptrend, supported by prices above its rising 50-day and 100-day moving averages. However, recent price action suggests that momentum is faltering, and the market may be entering a period of consolidation.

Key Observations:

• December High and Low: The ASX 200 recently broke below its November low, ending a 12-month sequence of rising lows. While this doesn’t confirm a trend change, it highlights buyer hesitation.
• Rebound in Progress: The index has rebounded off its January low and is now testing its 50-day moving average. Establishing a foothold above this level will be critical for the uptrend to continue.
• Potential Trading Range: If the ASX 200 cannot sustain gains above its December high, it may enter a trading range between the December high and low, similar to the two-month consolidation seen in April 2024.

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Equal-Weight Index Signals Caution

Unlike the market-cap-weighted ASX 200, the equal-weight version of the index paints a more cautious picture. The equal-weight index, which gives every stock the same influence, has struggled to reclaim its moving averages and is showing signs of potential structural weakness.

Key Observations:

• Rolling Moving Averages: The equal-weight index is consolidating below its 50-day and 100-day moving averages, which are beginning to roll over. This suggests the broader market may be losing momentum.
• Vulnerability to Declines: While prices remain vulnerable below moving averages, it doesn’t guarantee a breakdown. However, this pattern often marks the early stages of a shift from bullish to bearish sentiment.

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Strategies for Navigating Crosscurrents

In uncertain markets, a disciplined and cautious approach can help investors navigate potential headwinds. Here’s how to manage this environment:

1. Monitor Key Levels: Keep a close eye on the ASX 200’s December high and low. A break above the high signals strength, while a drop below the low could indicate a trend change or prolonged consolidation.
2. Focus on Trends: The overall trend remains up for now. Continue holding stocks that are in uptrends but monitor them closely for signs of weakness.
3. Don’t Rush to Sell: Avoid overreacting to temporary weakness. Selling profitable stocks at the first sign of concern can lead to missed opportunities if the trend resumes.
4. Know Your Exit Points: Use stop-losses and have clear exit strategies in place to protect capital if conditions deteriorate.

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Cautious Optimism for 2025

The ASX 200’s current state suggests a pause in the trend may be likely. While this could result in a multi-month consolidation, the market’s ability to maintain levels above its 50-day moving average will be crucial for its long-term trajectory. For now, the key is to stay disciplined, monitor the market closely, and remain prepared to act if the trend shifts.

At Motion Trader, we emphasize systematic, rules-based investing to help you stay on track in all market conditions. By focusing on trends, employing risk management, and avoiding emotional decisions, investors can confidently navigate even the most challenging crosscurrents.

👉 For a deeper dive into technical analysis, check out our Weekly Strategy Sessions.

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Motion Trader‘s algorithms scan more than 2,000 ASX stocks daily in search of medium term investment trends. We then tell our members precisely when to buy shares. And most importantly, we tell them when to sell.

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Video Timestamps

00:00 Intro

00:50 ASX 200: A rising tide turns to cross currents (be prepared)

02:00 Why the bullish trend is under pressure

04:15 Make sure you know these 2 key levels

05:50 This key indicator is stalling (how vulnerable are stocks?)

09:30 SP500 sets up a reliable pattern that often does THIS

11:20 Make sure you’re aware of this major development

14:15 Be ready for this surprising scenario (many people aren’t)

15:35 This is what I’m currently doing with my portfolio

Jason McIntosh | Founder, Motion Trader

Jason’s professional trading career began over 3 decades ago. He’s a founder of two stock advisory firms, a listed funds management business, and has helped thousands of investors navigate the stock market. Click here to read Jason’s incredible story of, at age 20, sitting alongside some of the world’s greatest traders (and the life changing experience that came with that).