ASX 200 Index risky pattern points to a crash after RBA rate decision

The ASX 200 Index continued its downtrend as Australian bond yields jumped after the Reserve Bank of Australia (RBA) delivered its interest rate decision. It dropped to a low of $8,838, its lowest level since October 1, and 3.35% below the highest level this year.

ASX 200 Index falls after RBA decision 

The ASX 200 Index retreated after the relatively hawkish RBA interest rate decision, which came a few days after the country published strong financial inflation data.

As was widely expected, the bank decided to leave interest rates unchanged at 3.60% and warned that it will remain cautious going forward. The statement said:

This meeting came a week after the Australian Bureau of Statistics (ABS) published the closely-watched consumer inflation report. This report showed that the headline, weighted, and trimmed mean inflation numbers were much higher than was expected.

The inflation report pushed the ASX 200 and the AUD/USD exchange rate downwards and bond yields higher as investors anticipated a more hawkish RBA.

In its statement, the RBA warned that risks to the Australian economy remained at an elevated level. These risks include the ongoing trade concerns between the US and China and other geopolitical issues. Still, the bank insisted that these risks have had a minimal impact on the Australian economy so far.

Analysts anticipate that the RBA will leave interest rates unchanged at 3.6% in the foreseeable future as it watches trends in inflation.

READ MORE: ASX 200 Index forecast ahead of RBA decision, Westpac & NAB earnings

Top Australian stocks movers

Australian stocks were mixed after the latest RBA interest rates decision. The best gainers on Tuesday were companies like NEXTDC, Domino’s Pizza, Light & Wonder, Steadfast, Capricorn Metals,  and Stanmore Resources.

On the other hand, resource-focused stocks were on edge as top commodities like gold and silver remained under pressure. Coronado Global Resources, Boss Energy, Liontown Resources, and Fortescue Metals were the top laggards.

Looking ahead, the next key catalyst for the ASX 200 Index will be the upcoming Australian composite PMI numbers that comes out on Wednesday and the trade data that comes out a day after that.

The index will also react to the upcoming National Australian Bank (NAB) and Amcor. These results will provide more color on the health of the Australian economy.

Additionally, it will react to the upcoming Supreme Court oral arguments on Donald Trump's tariffs in the United States. Signs that the court will rule against Donald Trump will be bullish on equities.

ASX 200 technical analysis 

ASX 200 chart | Source: TradingView

The daily timeframe chart shows that the ASX 200 Index dropped to $8,830 after the RBA interest rate decision. This retreat happened as the index formed the highly bearish double-top chart pattern at $9,056. Its neckline is at $8,717’

Top oscillators have moved downwards and the index has dropped below the 50-day moving average. Therefore, the most likely scenario is where it continues falling as sellers target the double-top’s neckline at $8,717.