Weekly Technical Outlook on Major Stock Indices 23 Oct to 27 Oct 2017

S&P 500 – Uptrend remains intact above 2544 support

Key Levels (1 to 3 weeks)

Intermediate support: 2570/62

Pivot (key support): 2544

Resistances: 2590 & 2600

Next supports: 2510 & 2489

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 hold above our predefined key medium-term pivotal support of 2540 as expected on the onslaught of a mini globalised “risk off” that took place on Thursday, 19 October 2017 (30^th anniversary of Black Monday).  

It printed a low of 2544 in the opening hour of the European session on 19 October before it staged a sharp reversal and hit our intermediate resistance/target of 2575 on last Friday, 20 October, U.S. session Click here for a recap on our previous weekly technical outlook. Current key elements as follow;

• The daily RSI oscillator is coming close to an extreme overbought level of 85% seen on 01 March 2017 but without any bearish divergence signal. These observations suggest the upside momentum of the on-going medium-term uptrend in place since 21 August 2017 low remains intact.
• Based on the Elliot Wave Principal/fractal analysis, the Index is still in the midst of undergoing its bullish impulsive intermediate degree wave 5/ from 27 March 2017 low to complete a higher primary degree impulsive wave (3) in place since 26 June 2016 low. The lower limit of the projected primary degree impulsive wave (3) stands at 2600 which also coincides closely with the upper boundary of the medium-term ascending channel in place since 29 August 2017 low (see daily & 4 hour charts).
• The key medium-term support now rests at 2544 (last Thursday, 19 Oct low & close to the 23.6% Fibonacci retracement of on-going advance from 29 Aug 2017 low).

Therefore, we are maintaining our bullish bias with an adjusted key medium-term pivotal support at 2544 for a further potential up move to target the next resistances at 2590 follow by 2600 next.

On the other hand, failure to hold above 2544 shall negate the bullish tone of the current medium-term uptrend in place since 21 August 2017 low for a deeper corrective pull-back/consolidation towards the next support at 2510 in the first step.

Nikkei 225 –  Uptrend remains intact above 21200 support

Key Levels (1 to 3 weeks)

Intermediate support: 21450

Pivot (key support): 21200

Resistances: 21900/22000 & 22475/22500

Next support: 20930 & 20230

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) had managed to hold above the 21180/100 predefined intermediate support zone as expected on the onslaught of a mini globalised “risk off” that took place on Thursday, 19 October 2017 (30^th anniversary of Black Monday).

It printed a low of 21206 on 19 Oct 2017 before it staged strong recovery and hit the first intermediate resistance/target of 21630/690 in today (23 Oct) early Asian session reinforced by a landslide victory for incumbent PM Abe’s LDP in the 48^th Japanese general election. Click here for a recap on our previous weekly technical outlook. Current key technical elements as follow;

• The daily RSI oscillator has continued to hover around its extreme overbought level of 80% seen on 09 December 2016 without any clear bearish divergence signal. These observations suggest the upside momentum of the on-going medium-term uptrend in place since 28 August 2017 low remains intact.
• The key medium-term support now rests at 21200 which is defined by the lower boundary of a medium-term ascending channel from 08 September 2017 low and close to the 23.6% Fibonacci retracement of the on-going advance from 08 September 2017 low.
• The significant resistances stands at 21900/22000 (upper boundary of the medium-term ascending channel & Fibonacci projection cluster) follow by 22475/22500 (Fibonacci projection cluster).
• The shorter-term (4 hour) Stochastic oscillator has reached an extreme overbought level which highlights the risk of an impending minor pull-back/consolidation in price action.

Overall, elements are still positive and we are maintaining our bullish bias. However, it may not be a direct rise scenario as the Index may see a pull-back first at the 21900/22000 resistance towards the 21450 intermediate support with a maximum limit set at the 21200 medium-term pivotal support before another potential upleg materialises to target the next resistance at 22475/22500.

However, failure to hold above 21200 shall negate the bullish bias for a deeper pull-back to test the 20930 downside trigger level (former medium-term swing high area of 24 Jun/11 Aug 2015). Only a break below 20930 is likely to open up scope for a corrective down move towards the next support at 20250 (range congestion from 22 Sep/27 Sep 2017) in the first step.

Hang Seng – 28240/28000 remains the key support

Key Levels (1 to 3 weeks)

Pivot (key support): 28240/28000

Resistances: 28800 & 29300

Next supports: 27300 & 26830

Medium-term (1 to 3 weeks) Outlook

Last Thursday (19 Oct), the Hong Kong 50 Index (proxy for Hang Seng Index futures) had tumbled by 2.4% in the last hour of the Asian session to print a low of 28073 before it managed to recover and trade back above the 28240 key medium-term support later in the U.S. session. The carnage was led by property development stocks due to fears of liquidity tightening conditions in China as there are speculations that the Chinese regulators may continue its “deleveraging polices”  after the end of the 19^th National Congress on Wed (25 Oct).

From a technical analysis perspective, the medium-term uptrend in place since 05 July 2017 low remains intact with its key medium-term pivotal support at 28240/28000 (excess) for a potential up move to retest the recent 28800 swing high area of  16/19 October 2017 before targeting the next resistance at 29300.

On the other hand, failure to hold above 28240/28000 may negate the bullish tone to open up scope for a deeper pull-back towards the next support at 27300 (swing low areas of 26/28 Sep 2017).

ASX 200 – Further potential upside after bullish exit from range configuration

Key Levels (1 to 3 weeks)

Pivot (key support): 5860

Resistances: 5950 & 6000

Next support: 5800

Medium-term (1 to 3 weeks) Outlook

Technical elements remain positive for the Australia 200 Index (proxy for the ASX 200 futures). Thus, we maintain our bullish bias with a tightened key medium-term pivotal support at 5860 (the swing low area of 19 Oct 2017 & the 23.6% Fibonacci retracement of the up move from 04 Oct 2017 low to 20 Oct 2017 high) for a further potential upleg to target the next resistances at 5950 follow by 6000 (Fibonacci cluster & upper boundary of the short-term ascending channel from 04 Oct 2017 low) next.

However, a break below 5860 may put the bulls on hold to see a deeper pull-back to retest the 5800 pull-back support of the former 4-month range configuration resistance.

DAX – 12890 is the key support to watch

Key Levels (1 to 3 weeks)

Intermediate support: 12980/954

Pivot (key support): 12890

Resistances: 13150, 13240 & 13435/560

Next supports: 12650 & 12300

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) had staged a 1.4% decline on Thursday (19 Oct) in line with the “synchronised carnage” seen in the rest of the major benchmark stock indices coupled with a localised European event, the on-going Catalonia crisis in Spain.

Interestingly, the drop had managed to hold right above our predefined key medium-term pivotal support at 12890 before it staged a rebound on last Friday (20 Oct) for an attempt to retest the 18 October 2017 high of 13095 (current all-time high). Click here for a recap on our previous weekly technical outlook.

No major changes in technical elements as they remain positive. We maintain our bullish bias and as long as the 12890 key medium-term pivotal support holds, the Index is likely to stage another potential upleg to target next resistances at 13150 follow by 13240 next in the first step.

On the other hand, failure to hold above 12890 should negate the bullish tone to for a deeper slide to retest the 12650 support. Only clear break below 12650 (daily close) is likely to trigger a potential corrective down move towards the next support at 12300 (former range resistance of 26 Jul/08 Aug/16 Aug 2017).

Charts are from City Index Advantage TraderPro

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