Index Strat Risk Target NKY Flat ASX Flat HSI Flat
Nikkei 225
Short-Term Technical Outlook
Congestion has grown to be quite mature for the Nikkei 225; and the presence of such obvious technical levels will soon call for a breakout. Since the failed run to overtake the confluence of resistance marked with the descending trendline and prominent 38.2% Fib retracement at 9,000, the Japanese benchmark has neither retested its ceiling nor has it developed a genuine trend reversal. Nonetheless, the levels for recent chop are very clear; which may help to establish follow through on a breakout. A range of the tail lows around 8,650/750 is the level likely to fall given the market’s dominate bias. Such a move would initially play out as just a retracement of the March rally. A push above the short-term falling trendline defining the highs of the past two weeks would put 9,000 in jeopardy. But a break beyond that would have to be a separate move.
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. With the index trading at the upper range of the recent range, I favor the bearish side near term, even if just for a few weeks.
S&P/ASX 200
Short-Term Technical Outlook
The Australian benchmark stock index has maintained it bullish bias; but the drive has been tempered. Since failing to overtake the long-term 38.2% Fib at 3,800/25 (which also happens to stand as a double top until further notice), the S&P/ASX 200 has held back from another serious test of these highs. In fact, the daily highs from the past three sessions have shown a resistance to forcing such highs again. This is the makings of a head-and-shoulders formation with the shoulder line around 3,775. The ‘neck’ of the formation draws the real interest for breakout potential however. As such, we will watch the short-term rising trend from late March lows following Monday’s low. A confirmed push below last week’s swing low could signal at least a temporary reversal if not a bearish trend revival.
Long-term Technical Outlook
The S&P/ASX is in a similar position. The rally from the low has reached the 4th wave extreme. As such, it is possible that the entire advance from the low is complete. It is also possible that the rally from 3073 is just the initial leg of a larger correction. Either way, a setback is likely over the next several weeks in either the resumption of the long term bear or wave B of a correction.
Hang Seng
Short-Term Technical Outlook
The Hang Seng Index may have officially broken through the floor of a rising trend channel that has been more than a month-and-a-half in the making. Monday’s decline forced what is considered the rising trendline that loosely defines the floor of the ascending congestion pattern that we have been witching for some time. However, this formation has only two true points of confirmation – not a good source of trend. Therefore, we will look for confirmation in a move below last week’s lows and the 50-day SMA now at 14,830 before venturing into a bearish bias.
Long-term Technical Outlook
The Hang Seng is in the exact same position as the S&P/ASX. The rally from the low has reached the 4th wave extreme. As such, it is possible that the entire advance from the low is complete. It is also possible that the rally from 11344 is just the initial leg of a larger correction. Either way, a setback is likely over the next several weeks in either the resumption of the long term bear or wave B of a correction.
Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can email them to John at <[email protected]>.