Stock Indices Weekly Technical Outlook 13 to 17 Jan

S&P 500 – Mix elements, watch 3280 key resistance

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Key Levels (1 to 3 weeks)

Resistances: 3280 & 3345/70

Supports: 3195, 3150 & 3070

Directional Bias (1 to 3 weeks)

Last week, the SP 500 Index (proxy for the S&P 500 futures) had a roller coaster ride where it dropped by -1.60% on 08 Jan during the Asian session after Iran’s missile strikes on U.S. bases in Iraq. It has pierced below the 3195 downside trigger level (printed an intraday low of 3181) before it staged a V-shaped recovery in the next 4 hours and rallied to print another fresh all-time high of 3286 on last Fri, 10 Jan European session. However, positive momentum has failed to make a follow through during last Fri U.S. session where the Index has undergone a slide of -0.70% from its European session high of 3286 and a recorded a daily close below the 3280 medium-term pivotal resistance as per highlighted in our previous report (click here for a recap).

Mix elements now as the daily RSI oscillator has continued to flash a bearish divergence signal in place since 03 Jan 2019. Prefer to turn neutral first between 3280 and 3195. Only a daily close above 3280 sees a continuation of the impulsive up move to target the next resistances at 3345 and 3370 next. On the flipside, a break with a daily close below 3195 opens up scope for a corrective decline (wave 4/) towards 3150 follow by 3070 within a major uptrend phase.

Nikkei 225 – Watch 24400 & 22940

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Key Levels (1 to 3 weeks)

Resistances: 24400, 24800/25000 & 25650

Supports: 22940, 22500 & 21340

Directional Bias (1 to 3 weeks)

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) has managed to stage a recovery of 4% after it printed an intraday low of 22944 but the Index is still below the 24400 key medium-term pivotal resistance as per highlighted in our previous report.

Mix elements as the Index is still “trapped” within major sideways configuration in place since 23 Jan 2018. Thus, prefer to turn neutral first between 24400 and 22940. Only a daily close below 22940 reinstates the bearish tone for a slide towards the lower area of the major sideways configuration to target the next supports at 22500 and 21340. On the flipside, a clearance with a daily close above 24400 opens scope for a rally to target the next resistances at 24800/25000 follow by 25650 (Fibonacci projection cluster).

Hang Seng – Bullish breakout above major resistance

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Key Levels (1 to 3 weeks)

Intermediate support: 28400

Pivot (key support): 27900

Resistances: 29000 & 30300

Next supports: 27100 & 26550

Directional Bias (1 to 3 weeks)

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has continued to inch high and staged a bullish breakout from its major descending resistance that has capped previous rebound since its 33530 all-time high printed on 29 Jan 2018.

Our earlier bearish conviction for a slide towards 27100 and 26550 has been reduced. Flip to bullish bias for in any dips above the 27900 key medium-term pivotal support for a further potential up move to target the next resistance at 30300 (03 May 2019 swing high). On the other hand, a daily close below 27900 reinstates the bearish tone for a slide back towards the support zone of 27100/26550 (the lower area of the sideways configuration in place since 26 Oct 2018).

ASX 200 – Bullish breakout from range/all-time high

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Key Levels (1 to 3 weeks)

Intermediate support: 6880

Pivot (key support): 6850

Resistances: 7040 & 7120/150

Next support: 6650/600

Directional Bias (1 to 3 weeks)

Last week, the Australia 200 Index (proxy for the ASX 200 futures) has staged a bullish breakout with a daily close above the upper limit of the “Ascending Triangle” range resistance/all-time high area of 6880/890.

Flip to a bullish bias from our earlier neutral stance in any dips above the 6850 key medium-term pivotal support (pull-back support of a descending resistance from 29 Nov 2019 high & 23.6% Fibonacci retracement of the recent up move from 02 Jan 2020 low to 10 Jan 2020 high) for another round of potential impulsive upleg to target the next resistances at 7040 and 7120/150 (Fibonacci expansion levels).

On the other hand, a break with a daily close below 6850 indicates a failure bullish breakout for a slide back towards the “Ascending Triangle” range support at 6650/600.

DAX – Potential start of another impulsive upleg sequence

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Key Levels (1 to 3 weeks)

Intermediate support: 13400

Pivot (key support): 13250

Resistances: 14600/750 & 14180

Next supports: 12900 & 12500

Directional Bias (1 to 3 weeks)

Last week, the Germany 30 Index (proxy for the DAX futures) has managed to stage a bullish breakout above the 13450 resistance of a medium-term range configuration in place since 19 Nov 2019.

Flip to a bullish bias from our earlier neutrality stance above the 13250 key medium-term pivotal support (also the lower boundary of the ascending channel from 15 Aug 2019 low) for a further potential push up to retest the all-time high area of 14600/750 before target the next resistance at 14180 (Fibonacci expansion cluster & the upper boundary of the ascending channel from 15 Aug 2019 low).

On the other hand, a break with a daily close below 13250 invalidates the bullish breakout for a reintegration back into the range for a slide back to retest the range support at 12900 in the first step.

Charts are from City Index Advantage TraderPro