Weekly Technical Outlook on Major Stock Indices 09 Apr to 13 Apr 2018

Major stock indices remain above supports despite on-going trade tensions between U.S & China

S&P 500 – Managed to hold the 2585 key medium-term support

Key Levels (1 to 3 weeks)

Pivot (key support): 2585/60

Resistances: 2690 & 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 staged another challenge on the 2585 key medium-term pivotal support (pull-back support of the former long-term ascending channel resistance from Mar 2009, ascending channel support from 11 Feb 2016 low & the “triangle range” support in place since 06 Feb 2018 low) as it printed a low of 2552 on 02 Apr 2018 Asian session but did not have a daily close below 2585 in any of days of last trading week. Click here for a recap on our previous weekly technical outlook.

From a technical analysis perspective, there are still positive elements that emerged at the end of last week despite the on-going proposed trade tariffs spats between U.S and China.

  • The relative strength chart of the high beta S&P Technology sector versus the S&P 500 according to their respective ETFs (XLK versus SPY) has continued above its key medium-term support whole the laggard, S&P Energy sector’s underperformance against the S&P 500 has started to abate as its relative strength chart (XLE versus SPY) has traced out a “higher low” and started to probe its key medium-term resistance (refer to the 3rd chart).
  • Another high beta/momentum driven NYSE FANG+ Index (FANGs stocks plus Alibaba, Baidu, NVIDIA, Tesla & Twitter) had managed to stage a rebound at its key major support zone of 2334/2300 and ended last week with a bullish weekly “Hammer” candlestick pattern that indicates a potential reversal in sentiment from negative to positive (refer to the 4th chart).

Therefore we tolerate the excess and as long as the 2585/60 key medium-term pivotal support holds, the Index can still shape a further potential rebound within its on-going range configuration to target 2690 follow by 2740/60 (upper boundary of the “triangle range” & Fibonacci projection/retracement cluster).

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

Nikkei 225 – Bullish breakout from “Descending Wedge” range configuration

Key Levels (1 to 3 weeks)

Intermediate support: 21300

Pivot (key support): 20800

Resistances: 22510 & 23280

Next support: 20330

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) had managed to exhibit another positive element where it stage a bullish breakout from the “Descending Wedge” range configuration resistance at 21600 (a bullish reversal chart pattern). Thereafter, it pull-backed at the start of last Fri, 06 Apr U.S. session after remarks from the key U.S. administration officials that a negotiation deal between U.S. and China to iron out the current trade tariffs dispute is still not on the cards yet. The Index had managed to hold right above the pull-back support of the former “Descending Wedge” resistance bullish breakout at 21300 (printed a low of 21312 on last Fri, 07 Apr) before it staged a rebound in today, 09 Apr Asian session.

No change, maintain bullish bias above the 20800 key medium-term pivotal support for a further potential bullish impulsive upleg 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).

However, failure to hold above 20800 should put the bulls on hold for another round of choppy decline to retest the 26 Mar 2018 low of 20330 (excess).

Hang Seng – Bullish consolidation phase remains in progress with 31800 as the upside trigger

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 shaped another choppy decline and broke below the 30000 psychological level which also coincides closely with the medium-term ascending trendline from 28 Dec 2016 low. It managed to stall right above the 09 Feb 2018 swing low of 29070.

In today, 09 Apr Asian session, the Index has managed to stage a rebound and traded back above 30000.  As technical elements remain unclear, we turn neutral first from a multi-week perspective between 29070 and 31800. 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 – 5660 is the key support to watch for now

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

Last week, the Australia 200 Index (proxy for the ASX 200 futures) had declined and challenged the “triangle range” support at 5750 (printed a low of 5700 on 04 Apr before it rebounded back above 5750).

Due to the current choppy environment, we adjust the key medium-term pivotal support to 5660 (the medium-term swing low of 10 Feb 2018 & the previous multi-month range support from Jun/Oct 2017) 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 – Upside momentum has resurfaced

Key Levels (1 to 3 weeks)

Pivot (key support): 12090

Resistances: 12500, 12750 & 13140/150

Next support: 11900/800 (major support)

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) had continued to push higher in conjunction with a bullish break above the 50% (former resistance) of the daily RSI oscillator. These observations suggest a revival of medium-term upside momentum of price action.

We maintain the bullish bias with an adjusted key medium-term pivotal support now at 12090 (the pull-back support of a former minor descending resistance from 27 Feb 2018 high & former minor siwng high area of 29 Mar 2018) for a further potential up move to towards the 12500/12750 range resistance in place since early Feb 2018. A clearance above 12750 opens up scope for a further recovery to target the 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 flipside, 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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