Here’s why the ASX 200 Index is in a strong bull run

The ASX 200 Index continued its strong rally and reached its all-time high even as odds that the Reserve Bank of Australia (RBA) will hike interest rates jumped. It has risen in the last three consecutive weeks, reaching a high of $9,173, up sharply from last year's low of $7,130.

Australian stocks rally despite rising Aussie and bond yields 

The ASX 200 Index continued soaring this week, even after Australia released a strong inflation report, raising the possibility that the Reserve Bank of Australia (RBA) will hike interest rates.

A report released on Wednesday showed that the headline Consumer Price Index) remained at 3.8%, higher than the median estimate of 3.7%. 

The trimmed mean consumer inflation rose to 3.4% from the previous 3.3%, while the weighted mean CPI remained unchanged at 3.3% in January.

As a result, the Australian dollar continued soaring, reaching a high of 0.7155, its highest level since June 2022. It has jumped sharply from a low of 0.5916. 

Similarly, Australian bond yields have continued rising in the past few months. The ten-year yield rose to 4.705%, while the five-year rose to 4.50%. These bond yields have continued rising in the past few months as odds of more interest rate hikes soared.

Most economists expect that the Reserve Bank of Australia will continue hiking interest this year now that Australia's inflation has remained substantially higher than expected. The bank has already hiked rates this year, and officials expect the trend to continue.

The ASX 200 Index soared as it tracked the performance of American companies as the Dow Jones, Nasdaq 100, and S&P 500 indices resumed the uptrend.

Most Australian companies were in the green today, with IDP Education rose by over 13% on Thursday. Ramsay Health Care jumped by over 10%, while Megaport, Telix Pharmaceuticals, Domino’s Pizza, Super Retail, Cleanway Waste Management, and Xero were among the top gainers.

On the other hand, companies like Cettire, WorleyParsons, Qantas Airways, Liontown, and Paladin Energy were among the top laggards in the ASX 200 Index.

ASX 200 Index technical analysis 

The weekly timeframe chart shows that the ASX 200 Index has been in a strong uptrend in the past few months. It soared to a high of $9,200, up sharply from last year's low of $7,130.

The index has moved above the key resistance level at $9,141, its highest level in October last year. Moving above that level invalidated the double-top pattern, a common bearish reversal sign in technical analysis.

The index has moved above the 50-week and 100-week Exponential Moving Averages (EMA), a sign that bulls are in control.

At the same time, the Relative Strength Index (RSI) and the MACD indicators have continued rising in the past few months. The RSI has jumped to 66, its highest level since August last year. 

Australian stocks remain above the Supertrend and the Ichimoku cloud indicators. Therefore, the most likely scenario is where the index will continue rising as bulls target the next key resistance level at $9,500. A move above level will point to more gains, potentially to the key resistance level at $10,000.