Daily Stock Indices Technical Trend Bias/Key Levels (Fri 22 Feb)

Bullish exhuastion signals seen in major stock indices.

Stock Indices (CFD) – Emergence of bullish exhaustion signals

  • US SP 500 – Trend bias: At risk of minor downside reversal. The 8 weeks of consecutive gains that recorded a rally 18% since its 26 Dec 2018 low of 2346 is approaching its 2815 long-term pivotal resistance (0.06% away from 20 Feb 2019 high of 2797). Its daily RSI oscillator has reached the overbought region which indicates an “overstretched” rally in price action. Since the 26 Dec 2018 low, the leading/outperforming sector is the Industrials which has recorded a rally by 26% within the same corresponding period. Interestingly, 2 key heavy weightage component stocks inside the Industrials sector; Boeing (BA) and Union Pacific (UNP) has started show bullish exhaustion in their price actions after fresh record highs on 21 Feb and 19 Feb respectively (see charts below). Key short-term resistance for today will be at 2797 for a potential push down to target the next near-term support at 2740/38 (former minor swing high of 05 Feb 2019 + lower boundary of a minor “Descending Wedge” from 29 Jan 2019 low. On the flipside, a clearance above 2797 sees a squeeze up to challenge the 2815 long-term pivotal resistance.
  • Japan 225 – Trend bias:  Sideways. Mix elements, prefer to adopt a neutrality stance between 21560 and 21250. A break above 21560 sees a further corrective rebound to target the next resistance at 21880 (the swing high area of 13 Dec 2018 + Fibonacci retracement/expansion cluster). On the flipside, failure to hold at 21250 triggers a minor downside reversal towards the 21000/20840 key medium-term support.
  • Hong Kong 50 - Trend bias: Push down within range. Challenged the key medium-term range resistance of 28560 (upper boundary of the “Expanding Wedge” from 26 Oct 2018 low) but no clear break above it. Tolerate the excess and maintain the bearish bias with 28560/770 the key resistance to watch for today for a potential push down to target the next near-term support on 28100 (the lower boundary of the minor “Ascending Wedge” from 22 Jan 2019). On the flipside, a break above 28770 invalidates the bearish tone for a squeeze up towards the lower limit of the long-pivotal resistance at 29100 (former major swing low areas of 09 Feb/04 Apr 2018).
  • Australia 200 - Trend bias: At risk of minor downside reversal. The on-going rebound of 14% from its 23 Dec 2018 low of 5401 has reached the key long-term pivotal resistance zone of 6120/6200 (click here for a recap on our weekly outlook report). The hourly Stochastic oscillator has shaped a bearish divergence signal which indicates a minor bullish exhaustion in price action. Key resistance for today will be at 6200 for a potential push down to retest the near-term supports at 6120 and 6084. On the flipside, a weekly close above 6200 invalidates the bearish scenario for a further push up to target the next resistance at 6210.
  • Germany 30 – Trend bias: At risk of minor downside reversal. The on-going rebound of 13% from its 26 Dec 2018 low of 10194 has reached the key medium-term  pivotal resistance zone of 11390/540 (click here for a recap on our weekly outlook report) coupled with a bearish divergence signal seen in the daily RSI oscillator. Key resistance for today will be at 11540 for a potential push down to target the next near-term supports at 11260 (former minor swing high areas of 19/20 Feb 2019 + minor ascending trendline from 08 Feb 2019 low). On the flipside, a clearance above 11540 invalidates the bearish scenario for an extension of the corrective rebound towards 11800 (the former neckline support of the bearish Head & Shoulders).


click to enlarge charts  from eSignal



Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.