Direction of the ASX 200 is generally dictated by the two largest sectors: banks and miners.
The ASX 300 Metals & Mining index rallied off its long-term rising trendline this week. Breakout above 3600 would signal that the correction is over and a new advance is to be expected.
But the big four banks dominate index weightings and the ASX 300 Banks index respected resistance at 8000, confirming a primary decline. Trend Index peaks below zero warn of strong selling pressure. Target for the decline is the 2016 low at 7100.
The ASX 200 index recovered above primary support level at 5800 but its hold looks precarious. Bearish divergence on Twiggs Money Flow warns of long-term selling pressure (the Trend Index is even more bearish). Retreat below 5800 is likely and would confirm the primary down-trend. Breach of mid-2017 lows at 5650 would strengthen the bear signal, offering a target of 5050 (the June and November 2016 lows).