Weekly Technical Outlook on Major Stock Indices 16 Apr to 20 Apr 2018

S&P 500 – Due for a potential minor bullish breakout

Key Levels (1 to 3 weeks)

Pivot (key support): 2585

Resistances: 2680 & 2740/50

Support: 2540/30 (long-term pivot)

Medium-term (1 to 3 weeks) Outlook

Last week, the U.S. SP 500 Index (proxy for the S&P 500 futures) had managed to inch slightly higher and tested the 2680 neckline resistance of a minor bullish reversal “Inverse Head & Shoulders” range configuration in place since 27 Mar 2018 on last Fri, 16 Apr. Click here for a recap on our previous weekly technical outlook.

No major changes on its key technical elements.  An interesting positive development has taken shape in terms of sector rotation where the pervious laggard sector, the S&P Energy has started to show signs of outperformance against the benchmark S&P 500 according to its relative strength chart analysis on the Energy sector ETF (XLE versus SPY) (refer to the last chart).

Therefore, we maintain the bullish bias above the 2585 key medium-term pivotal support (also the lower boundary of the “triangle” range configuration in place since 06 Feb 2018 and a break above 2680 is likely to reinforce a potential push up to target 2740/50 (upper boundary of the “triangle range” & Fibonacci projection/retracement cluster).

However, a daily close below 2585 negates the rebound scenario for a further decline to retest the 2540/30 major support zone.

Nikkei 225 – Further potential up move above 21030 key support

Key Levels (1 to 3 weeks)

Intermediate support: 21530

Pivot (key support): 21030

Resistances: 22510 & 23280

Next support: 20550

Medium-term (1 to 3 weeks) Outlook

Maintain bullish bias above adjusted key medium-term pivotal support now at 21030 (the pull-back support of the former “Descending Wedge” resistance from 27 Feb 2018 high & 61.8% Fibonacci retracement of the on-going up move from 26 Mar 2018 low to today, 16 Apr current intraday high of 21988) for a potential up move to target 22510 resistance next (former swing high area of 27 Feb 2018 high) and above it opens up scope for an extension of the up move towards 23000/23280 resistance next (former range top of 09 Nov/18 Dec 2017 & 76.4% Fibonacci retracement of the recent decline from 23 Jan 2018 high to 24 Mar 2018 low).

On the other hand, failure to hold above 21030 should put the bulls on hold for another round of choppy decline to retest the Feb 2018 low of 20550.

Hang Seng – Bulls need to break above 31800

Key Levels (1 to 3 weeks)

Supports: 29070, 28100 & 26000/25750

Resistances: 31800 & 33430/530

Medium-term (1 to 3 weeks) Outlook

Last week, the Hong Kong 50 Index (proxy for Hang Seng Index futures) had continued to trade within a choppy range due to higher interest rate risk attributed from the Hong Kong central bank (HKMA) to buy up HKD as the USD/HKD fixed peg tested the upper limit of the predetermined policy band of 7.85. These interventions amounting to US$1.7 billion in the FX market stoked fears of a liquidity tightening environment that can trigger a continuation of interest rates increases in HK that will dampen the outlook on the local stock market.

From a technical analysis perspective, no major changes on its key elements as the Index continued to evolve within a range of 31800 and 29070.

Only a clear break (a daily close) above the 31800 range top in place since 27 Feb 2018 opens up scope for a potential rally to retest its current all-time high area of 33430/530 in the first step.

On the flipside, a break below 29070 should see a further decline towards the next support at 28100 (the swing low areas of 25 Oct/07 Dec 2017 & the former major swing high area of mid-May 2015).

ASX 200 – Potential push up to test “triangle” range resistance

Key Levels (1 to 3 weeks)

Intermediate support: 5750

Pivot (key support): 5660

Resistances: 5910 & 6030

Next support: 5500

Medium-term (1 to 3 weeks) Outlook

No change, maintain bullish bias above 5660 key medium-term pivotal support for a potential push up to test the 5910 intermediate resistance before the 6030 “Symmetrical Triangle” resistance.

On the other hand, a clear break (a daily close) 5660 is likely to trigger the start of a multi-month corrective down move to target the next support at 5500 in the first step (the former range resistance of 07 Oct/25 Nov 2016 & close to the 50% Fibonacci retracement of the up move from 10 Feb 2016 low to 09 Jan 2018 high).   

DAX – In the midst of a potential bullish breakout

Key Levels (1 to 3 weeks)

Intermediate support: 12400

Pivot (key support): 12090

Resistances: 12560, 12750 & 13140/150

Next support: 11900/800 (major support)

Medium-term (1 to 3 weeks) Outlook

Last Friday, 13 Apr, the Germany 30 Index (proxy for the DAX futures) had staged a push up to test the 12500/560 neckline resistance of “Double Bottom” configuration in place since 06 Feb 2018 low.

No change, maintain bullish bias above 12090 key medium-term pivotal support and a break above 12560 is likely to trigger a bullish breakout to target 12750 before next resistance at 13130/150 (the former minor swing low area of 11/17 Jan 2018 & the 76.4% Fibonacci retracement of the recent steep decline from its current all-time high seen on 23 Jan 2018 to 06 Feb 2018 low.

On the other hand, failure to hold at 12090 negates the bullish tone for another round of choppy decline to retest the major support zone of 11900/800 (the primary ascending trendline from Feb 2016 low).

Charts are from City Index Advantage TraderPro & eSignal

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