Index Strat Risk Target NKY FLAT ASX FLAT HSI FLAT
Nikkei 225
Short-Term Technical Outlook
The Nikkei retracement has extended beyond last Thursday’s lows. We are now testing the confluence of technicals that was major resistance for the market through the end of April and into the begging of May. The seven month, falling trend (former resistance) is now a floor along with the long-term 38.2% Fib retracement and 50-day SMA around 9025/00. This level is integral to holding up the bullish bias the market has held since March. Should this fresh support give way, it would be a quick drop to retest 8,500.
Long-term Technical Outlook
The correction from 7028 has reached the upper end of the former 4th wave triangle. An Elliott guideline is that corrections tend to end near the extreme of the fourth wave of one less degree. There is also divergence with daily RSI at this high. However, the advance has not even retraced 38.2% of the decline from 2007 yet. As such, additional upside seems likely. Structure of the advance does not appear complete either. In fact, the rally could accelerate in wave iii of c. It is worth noting that waves a and c (labels not shown) would be equal near the 50% retracement of the decline (the area is circled).
S&P/ASX 200
Short-Term Technical Outlook
Unlike the Japanese and Hong Kong markets, the Australian equity benchmark index has a relatively unstable platform for support. An ill-defined, rising trend following the lows starting in mid-March is the primary technical pattern for bulls to follow. On the other hand, we have the double top at 3,815 which can once again prove troublesome for advances. Momentum would be readily available should the aforementioned resistance give way. Alternatively, the choppy and closely set lows of the past two months could easily trip up a bearish break down.
Long-term Technical Outlook
The S&P/ASX is in a similar position. The rally from the low has reached and exceeded the 4th wave extreme but the advance is shy of Fibonacci resistance. Only a drop below 3661 would suggest that a top is in place.
Hang Seng
Short-Term Technical Outlook
While the Hang Seng opened the week sharply lower, the market would make up for the gap through the active trading session; but recovering its lost ground and then some. The initial decline was notable because it would test the 16,300 lows from the past few weeks. A reversal subsequently held the market back from retracing the gaps from last month that drove us through 16,000. The long-term 50% Fib retracement of the July-October down draft near 17,050 is offering a temporary point of resistance; but a true bullish bias can easily overrun this level.
Long-term Technical Outlook
The Hang Seng rally is closing in on the 50% retracement of the decline from the 2007 high. While there is the possibility of short term fluctuations, additional upside is likely in order to satisfy equality with waves a and c (labels not shown). These waves would be equal at 20362, which is very close to the 61.8% of the decline.
Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can email them to John at <[email protected]>.