ASX 200 Technical Analysis: Biggest Pullback in 5 Months — What Investors Should Do Now (September 2025)

By Jason McIntosh | 5 September 2025

ASX 200: Sharpest Pullback Since April

ASX 200 technical analysis shows the index has just had its biggest pullback in five months, a sharp 3.9% decline from the all-time high two weeks ago. While the drop is notable, it’s part of a larger trend structure — and knowing how to position now is key.

Sharp declines on Tuesday and Wednesday rattled investors, but is this the start of something bigger — or just another pause in the uptrend?

• The index had rallied almost 25% since the April low before this week’s fall.
• Pullbacks of this size are not unusual — the last comparable drop came in May during the early rebound phase.
• Importantly, the ASX 200 has now retested its 50-day moving average, a common feature of healthy uptrends.

“The money is made by maximising time on a trend — not by trying to catch every back-and-forth move.”

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Why a Pullback Was Likely

Last week we discussed how the index was stretched above its 50-day moving average. History shows that when prices rise too far, too fast, the odds of a pullback increase.

This is why I suggested being mentally prepared for a correction, rather than rushing to take profits. Trends often continue longer than expected — and selling too early risks missing major upside.

Learn more about how moving averages guide stock market timing

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Equal Weight Index: Broad Market Still Resilient

A closer look at the ASX 200 Equal Weight Index shows that the broader market is holding up far better than the headline index:

• The equal weight index remains only slightly below its all-time high.
• Most of the weakness has been concentrated in the large caps.
• Broad participation suggests the market’s underlying structure remains bullish.

This is also reflected in the Small Ordinaries and Emerging Companies Index, which continue to show strength.

“Healthy bull markets are broad-based — weakness in a few large caps isn’t enough to derail the trend.”

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S&P 500: Resilience Near All-Time Highs

Turning to the S&P 500 technical analysis, the index dipped early in the week but quickly rebounded and is once again approaching record highs.

Key takeaways:

• Prices held above the 20th August low, keeping momentum intact.
• Both the 50- and 100-day moving averages continue to trend higher.
• Similar resilience is visible in the Dow Jones and NASDAQ, both bouncing strongly from support.

This reinforces the bullish global backdrop, even as markets digest gains.

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The Path Ahead: What Investors Should Do

So where does this leave us?

• Expect more consolidation. A multi-week pause would be normal after such a strong run.
• Stay with the trend. Prices remain above rising moving averages, and the equal weight index confirms broad strength.
• Use wide trailing stops. This ensures you ride the trend for as long as possible while protecting capital when conditions change.

Trying to sell and re-buy every dip is a tough game. Instead, focus on staying invested in winning positions until the trend truly breaks down.

Learn how to identify ASX stocks in strong uptrends

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Final Thoughts

The ASX 200’s quick sell-off may feel uncomfortable, but in context it’s a routine pullback within a strong uptrend. History shows that consolidations often build the base for higher levels in the months ahead.

For now, the odds still favour the bulls — provided you manage risk with discipline.

👉 For a deeper dive into technical analysis, check out our Weekly Strategy Sessions.

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Motion Trader‘s algorithms scan more than 2,000 ASX stocks daily in search of medium term investment trends. We then tell our members precisely when to buy shares. And most importantly, we tell them when to sell.

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Video Timestamps

00:00 Intro 00:50 ASX 200’s biggest fall in 5 months (is more coming?)

04:25 This often happens after a pullback from the highs

05:15 ASX 200 hasn’t done this for 20 years

06:25 This index tells us something the ASX 200 doesn’t

08:05 Don’t overlook these key facts

10:55 S&P 500 avoids a pullback trigger (is the danger over?)

12:00 Look what the Dow just did — don’t miss this structure

14:00 Many people fell for this age-old trap (again!)

16:10 What the S&P 500 Equal Weight is signalling now

Jason McIntosh | Founder, Motion Trader

Jason’s professional trading career began over 3 decades ago. He’s a founder of two stock advisory firms, a listed funds management business, and has helped thousands of investors navigate the stock market. Click here to read Jason’s incredible story of, at age 20, sitting alongside some of the world’s greatest traders (and the life changing experience that came with that).