From Down Under to Up Over: Australian Shares on the Rise 

From Down Under to Up Over: Australian Shares on the Rise 

The Australian 200 index (ASX: S&P/ASX200) ticked up for its best close in the last nine trading sessions, as two of its main constituent sectors soared on optimistic news. Higher commodity prices aided a rally in lithium and commodity stocks while the financial sector fears eased to boost the equity market on improved sentiment. The index closed 1% higher, with the bulls looking to take momentum into the next trading session. 

The index has a 24.3% weighting in the materials sector, with a 28.1% weighting in financials. Therefore, the easing of the banking turmoil fears trickled through to the index, with its leading four lenders gaining between 0.9% and 1.4% in its Tuesday session. Liontown Resources was the primary mover for the day, soaring 67% as the Lithium producer refused a takeover bid from Albemarle Corp, who put a $3.7Bn valuation on the company. BHP and Rio Tinto edged up 0.9% and 1.6%, respectively, to round off a successful day in the Australian equity market.  

Technical 

With volatility decreasing, a symmetrical triangle has formed in the retracement process. On Tuesday, the index broke through the 23.60% Fibonacci retracement of 7005.2, meeting resistance in the triangle around 7042.9.  

At the current level of 7027, there is a possibility for the bears to retest the 23.6% Fibonacci retracement at 7005.2, where a bearish breakout could signal a potential move down to the triangle support at 6965.9.  

In the bull case, if support at 7005.2 holds, there could be another test of the triangle resistance at 7042.9, where a breakout could signal a bullish move to the 38.20% Fibonacci retracement of 7073.9. From there, the bulls could potentially target the 50% retracement, where it could meet the 50-day moving average at 7129.3. 

Summary 

Tuesday was a prosperous trading day for the Australian equity market, but the index met resistance, which could result in a retest of 7005.2. From there, sentiment could aid either the bulls to push toward 7073.9 or the bears toward 6965.9. 

Sources: Koyfin, Tradingview, Reuters, S&P Global