Index Strat Risk Target NKY Flat ASX Flat HSI Flat
Nikkei 225
Short-Term Technical Outlook
Though the bull trend has not been broken, the Nikkei’s steady run from early March has clearly lost momentum. Technically, the Nikkei 225 pushed key resistance found in the confluence of a long-term 38.2% Fib retracement and descending trendline for a five-month wedge at 9,000; but such things are rarely so strict. In fact, we haven’t seen a confirmed daily bar close above this level in the more than two weeks the market has confronted this level. At the same time, we have seen the steady trendline pulled from the early March swing low overrun only to rally back towards the magnetic 9,000 level. The path has been cleared for a break in either direction; but we need momentum to facilitate what may be a push for the next leg of a major trend. We will watch for a close above 9,000 or below 8,680 for a sign of direction.
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
A sharp, but short-lived, rally in its morning trading hours pushed the Australian benchmark S&P/ASX to its highest high since the beginning of-the-year reversal around 3,815. This level holds significant influence over the price action not only as the swing high that started the year but also as the independently (it originates from a wave that did not exist when the January high was put into place) derived 38.2% Fib of the Sept to Mar bear wave. This is a key ‘line in the sand’ that can redefine price action for weeks or months to come; and recent price action shows the market’s recognition of its influence. The bull’s rally has started to take on some chop since the turn of the month. This can either help to build pressure behind a breakout with a close above 3,815; or it could be the fading interest of a bull run before a significant reversal.
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
While other Asian stock markets have been held back by their respective ceilings, the Hong Kong benchmark opened Thursday with a gap clear through its own boundary. A bullish open saw the Hang Seng Index trading above the 15,760 highs from Dec and Jan to forge a new six month high. And, though the market would retrace almost immediately from its high perch, the market’s intentions have already been confirmed. As long as bulls can keep the index above the floor under its rising trend channel from March, the upside bias will remain intact and the next major targets will be the 100-day SMA around 16,335 and long-term 38.2% Fib retracement at 17,000.
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]>.