Weekly Technical Outlook on Major Stock Indices 12 Mar to 16 Mar 2018

S&P 500 – A retest on its recent all-time high

Key Levels (1 to 3 weeks)

Intermediate support: 2755/25

Pivot (key support): 2680

Resistances: 2800/810 & 2870/77

Next support: 2540/30

Medium-term (1 to 3 weeks) Outlook

After a test on the 2690/83 medium-term pivotal support, the U.S. SP 500 Index (proxy for the S&P 500 futures) had managed to stage the expected bullish reversal last week and hit the first medium-term resistance/target of 2800/810 (printed a current intraday high of 2800 in today, 12 Mar Asian session). Click here for a recap on our previous weekly technical outlook.

Overall technical elements remain positive with the high beta momentum driven S&P Technology sector continues to outperform the S&P 500 as seen from its relative strength chart analysis derived from its respective ETFs; XLK versus SPY – refer to the 3^rd chart).

Given that the first medium-term resistance has been met at 2800/810 coupled with an extreme overbought reading seen in the shorter-term 4 hour Stochastic oscillator, the Index may see a pull-back /consolidation first towards the intermediate support at 2755/25 (see 4 hour chart) before another potential bullish impulsive upleg resumes to target the next resistance at 2870/77 (the 1.00 Fibonacci projection of the recent up move from 09 Feb 2018 U.S. session low to 16 Feb 2018 U.S. session high projected from 02 Mar 2018 low & the current all-time high level).

However, failure to hold above the 2680 medium-term pivotal support should negate the bullish tone for another slide to retest the 2540/30 major support zone.

Nikkei 225 – Still holding above 20800/600 major support

Key Levels (1 to 3 weeks)

Intermediate support: 21500/350

Pivot (key support): 20800/600

Resistances: 22510 (upside trigger), 23500 & 23850/24200 

Next support: 19300

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had managed to hold above its major support zone of 20800/600 after a retest on 02 Mar 2018. Several positive elements have been sighted as follow;

• The retest on the 20800/600 has formed a daily bullish reversal “Hammer” candlestick pattern on 02 Mar 2018. Last week, a positive follow through in price action has materialised as it staged a rally of 6% to print a high of 21884 on last Fri, 09 Mar U.S. session (see daily chart).
• After taking into account of last week’s price action, the Index has started to trace out an impending medium-term bullish “Double Bottom” configuration with its corresponding neckline resistance at 22510. These observations suggest that the Index is now undergoing a potential “bottoming out” process after its recent prior steep decline of 14% from its 20-year high of 24200 printed on late Jan 2018 (see 4 hour chart).
• The next significant medium-term resistance stands at the 23850/24200 zone which is defined by the 1.618 Fibonacci projection of the up move from 10 Feb 2018 low to 27 Feb 2018 high projected from the recent low of 02 Mar 2018 (a potential intermediate degree bullish impulsive wave 3 target based on Elliot Wave/fractal analysis) and also the exit potential on the impending “Double Bottom” configuration.
• In the shorter-term (1-3 days), the Index may see a pull-back first towards the intermediate support zone of 21500/350 (the minor ascending trendline from 02 Mar 2018 low & the minor congestion zone formed on 08/09 Mar 2018) as the 4 hour Stochastic oscillator has started to turn down from an extreme overbought level.

Overall, technical elements remain positive. As long as the 20800/600 pivotal support holds and a break above 22510, the Index is likely to shape another potential bullish impulsive upleg towards the next resistances of 23500 follow by 23850/24200 in the first step.

However, a failure to hold above 20800/600 should damage the primary uptrend in place since Jun 2016 low to kick start of multi-month corrective phase to target the next support at 19300 in the first instance.

Hang Seng – Continues to exhibit positive elements

Key Levels (1 to 3 weeks)

Intermediate support: 30830/600

Pivot (key support): 30070

Resistances: 31800 (upside trigger) & 33430/530

Next support: 29070

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had staged a retest on the predefined 30070 medium-term pivotal support before it a recovery took shape last week as it rallied by 4% to print a high of 31300 on last Fri, 09 Mar U.S. session.

Technical elements remain positive as follow;

• The daily RSI oscillator has continued to exhibit traits of an improving medium-term upside momentum as it manages to hover above a corresponding ascending trendline now acting as a support at the 50% level.
• After taking into account of last week’s price action, the Index has started to trace out an impending medium-term bullish “Double Bottom” configuration with its corresponding neckline resistance at 31800. These observations suggest that the Index is now undergoing a potential “bottoming out” process after its recent prior steep decline of 13% from its current all-time high of 33530 printed on 29 Jan 2018 (see 4 hour chart).
• The 4 hour Stochastic oscillator has reached an extreme overbought level where the Index faces the risk of a short-term pull-back towards the 30830/600 intermediate support (former minor swing high areas of 05/06 Mar 2018) before another upleg materialises.

Therefore, we maintain the bullish bias as long as the 30070 key medium-term pivotal support holds and a break above 31800 is likely to reinforce another potential upleg to retest the current all-time high zone of 33430/530

However, a break below 30070 support should negate the bullish tone for a slide to retest the 09 Feb 2018 major swing low area of 29070.

ASX 200 – Maintain bullish bias above 5880 support

Key Levels (1 to 3 weeks)

Intermediate support: 5940

Pivot (key support): 5880

Resistances: 6084 (upside trigger), 6150 & 6300/350

Next support: 5670

Medium-term (1 to 3 weeks) Outlook

In the earlier part of last week, the Australia 200 Index (proxy for the ASX 200 futures) had staged a challenge on the predefined 5950/30 medium-term pivotal support (printed a low of 5894 on 07 Mar 2018) before it reversed up to surpass the recent minor swing high of 6000 and ended  

Thus, we maintain the bullish bias with an adjusted key medium-term support now at 5880 (to take into account of last week’s whipsaw & also the low of the daily bullish reversal “Hammer” candlestick pattern formed on 02 Mar 2018) with 6084 as the upside trigger level (the descending trendline from 09 Jan 2018 high) to reinforce the start of a new potential bullish impulsive upleg to retest the Jan 2018 swing high of 6150 before targeting the next significant medium-term resistance at  6300/350.

However, failure to hold above 5880 should negate the bullish tone for a further slide to retest the 5670 major support.

DAX – Bullish basing configuration in progress

Key Levels (1 to 3 weeks)

Intermediate support: 12260

Pivot (key support): 11900/800

Resistances: 12750 (upside trigger), 13140, 13300 & 13560

Next support: 10800

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) had managed to stage a positive follow through after a retest on its major support zone of 11900/800 with a daily bullish reversal “Hammer” candlestick pattern sighted on 02 Mar 2018.

In addition, the daily RSI oscillator is now attempting to stage a bullish breakout above its corresponding resistance at the 50% level which indicates a revival of medium-term upside momentum.

Therefore, we maintain the bullish bias above the 11900/800 pivotal support with an adjusted upside trigger level at 12750 (close to the neckline resistance of the impending bullish “Double Bottom” configuration – refer to 4 hour chart) to reinforce the start of a potential bullish impulsive upleg to target the next resistance at 13140/13300 in the first step (former minor swing low areas of 11/18 Jan 2018 & a Fibonacci cluster).

On the other hand, failure to hold above 11900/800 should invalidate the recovery scenario to open up scope a multi-month corrective down move to test the next support at 10800 in the first step.

Charts are from City Index Advantage TraderPro  & eSignal

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