Index Strat Risk Target NKY Short 9,150 7,750 ASX Flat HSI Flat
Nikkei 225
Short-Term Technical Outlook
Last Thursday, it seemed as if Japanese equities were charging up the next, long-term bear wave. However, Friday’s bullish gap and aggressive rally threw the breaks on any immediate downdraft. At the week’s close, the market was still below the range high at 8,825 that was so prevalent over the previous week – so there was still a chance that bears could revive their drive. However, after seeing Monday’s bullish follow through; it is clear that the probabilities have changed. Now stationed just below the 9,000 resistance defined by a long-term 38.2% Fib and notable falling trend top, the market does not have to overextend itself to force a breakout to revive the long-term bullish trend (in contrast to the spent rally through March and into April). The market will retain its bearish lean until there is a confirmed close above 9,000.
S&P/ASX 200
Short-Term Technical Outlook
The Australian stock market has made a clear and forceful break for direction with Monday’s rally. Though we technically saw a breach of 3,815 three weeks ago, the rally was immediately snuffed out as the market lacked conviction in what could have amounted to the next step in confirming a bullish market cycle. Monday’s candle comes with all the correct features. The rally opened at the session low and closed at its high; the close has brought us to a new high; and there are few significant technical levels in the immediate vicinity to curb the drive. Follow through should be easy to generate after having run so many stops and triggering bullish entry orders. Therefore, if we do indeed see a pull back; we would be very skeptical of the strength behind this trend.
Hang Seng
Short-Term Technical Outlook
We have seen monumental reversals across Asian equities; but none of the developments exuded the wild abandon that the Hang Seng Index has shown through its three day turn. It began on Friday with a bullish gap that curbed momentum behind a bearish channel break. However, the market could have retained its bias from that point. With the follow up gap over the weekend and aggressive rally through Monday’s session though; there is far more certainty that we are seeing a trend revival after a brief pause. We have already overtaken last month’s swing high and the 200-day SMA at 16,000 with yesterday’s move. The next objective for bulls will be the long-term 38.2% Fib at 17,000. Beyond this, resistance will spread out.
Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can email them to John at <[email protected]>.