Index Strat Risk Target NKY Short 9,125 7,750 ASX Short 3,860 3,390 HSI Flat
Nikkei 225
Short-Term Technical Outlook
Japanese equity traders seem to have tentatively chosen a direction after nearly three weeks of congestion. The Nikkei 225 broke is short-term rising trend channel / wedge pattern with a plunge that printed a confirmed daily close below the rising trend that has developed through April. For short-term traders, this move may be taken as a sign to jump on a new bear trend; but confirmation is still essential. Congestion from the past in the vicinity can trip up a new move. A confirmed close below the 20 day simple moving average is a good first start; but clearing the 8,500 would be far more influential on the broader market.
Long-term Technical Outlook
As mentioned for the last few weeks, a multi month low is in place and what is most likely a corrective advance is underway. An initial objective is the 38.2% of the decline from 18297-7029 at 10130. As the pattern unfolds, we’ll be able to better pinpoint likely potential resistance. The short term trend is up as long as price is above 8088.
S&P/ASX 200
Short-Term Technical Outlook
The bearish reversal pattern from Friday is shaping up nicely. Not only has the Australian benchmark equity index confirmed the evening star candle formation from Friday; but follow through declines have tentatively cleared a rising trend channel bottom that has defined price action for over a month now. A minor Fib confluence is still in place below Tuesday’s lows; but a sharp jump in volatility can easily clear this minor support. A short bias seems to be the market’s chosen path, but a temporary bounce may precede follow through on more developed bear trend.
Long-term Technical Outlook
The S&P/ASX is in the exact same position as the Nikkei. The rally above Elliott channel resistance and 3579 confirms that 5 waves are complete from the 2007 high. Near term, the trend is up as long as price is above 3547. Long term Fibonacci resistance does not begin until 4174.
Hang Seng
Short-Term Technical Outlook
Tight congestion that has developed after the Hang Seng’s six-month highs late this past week has finally given way to a volatility down thrust. However, Tuesday’s drop has not yet confirmed a change in trend. The Hong Kong markets are still engaged in the steady rising trend that has been in place since early March and has been loosely defined by a rising channel since then. This technical construct should not be taken for exactly levels of confirmation; but a break from this channel would likely draw more interest from market participants and therefore build momentum behind a more aggressive decline.
Long-term Technical Outlook
A multi month low is also in place for the Hang Seng. The drop from 15781 is in 5 waves but failed to end below the wave 3 extreme at 10676. Still, the strong bullish evidence present in the other Asian indexes suggests that the likely path for the Hang Seng is higher. As such, I am labeling the decline from 15781 as a truncated 5th wave. The short term trend is considered up as long as price is above 13412.
Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can email them to John at <[email protected]>.