The Australian 200 index (ASX: S&P/ASX 200) has been under bearish control as traders started taking some risk off the table, resulting in three consecutive sessions that closed in the red. With few economic releases in the upcoming days, sentiment could continue to be the market driver, leaving the bulls vulnerable once more. 

The lack of progress in the negotiations around raising the US debt ceiling has caused caution among traders as the deadline for a potential default looms. Hawkish Federal Reserve comments further aided the low-risk appetite, as the FOMC minutes are due later today. The Australian 200 index slid, mainly led by a sharp decline in iron ore prices, weighing down the mining sector. As we advance, can the bulls resist the bearish momentum or will the risk-off sentiment enforce a continuation of the slide? 

Technical 

The 1D chart shows a symmetrical triangle formation, where the bears reacted to the resistance, enforcing a leg down to 7,213.8, close to the 38.2% Fibonacci retracement from the mid-April peak. The bears now face the triangle support at the 50-day moving average at 7,202.1 as they look to break the triangle down. 

A successful breakdown could open the possibility for a test of the Fibonacci midpoint at 7,143.6 before the golden ratio comes into play at 7,085.1. A breakdown at this level could confirm the downtrend toward 7,004.0. 

Alternatively, if the bulls manage to overcome the bears in their scuffle for momentum, the 23.6% Fibonacci retracement could resist a breakout from the triangle to the upside. In the case of a breakout, psychological resistance at 7,386.5 remains a barrier to additional bullish momentum. 

Summary 

The risk sentiment could drive the price action in a quiet week of economic data releases from Australia. If there are no improvements in the US debt ceiling negotiations, the index could experience a triangle breakdown toward 7,143.6 and 7,085.1. 

Sources: Koyfin, Tradingview