Weekly Technical Outlook on Major Stock Indices 14 May to 18 May 2018

S&P 500 – Bullish breakout from 4-month range configuration

Key Levels (1 to 3 weeks)

Intermediate support: 2700

Pivot (key support): 2680

Resistances: 2760/65 & 2800

Next support: 2585

Medium-term (1 to 3 weeks) Outlook

The SP 500 Index (proxy for the S&P 500 futures) had indeed staged the expected bullish breakout above 2720 (the upper boundary of the 4 - month “Symmetrical Triangle” range configuration in place since late Jan 2018).  For a recap on the earlier key elements that were highlighted to support our anticipated bullish breakout scenario, click here for the details.

We maintain the bullish bias with an adjusted key medium-term pivotal support now at 2680 (former minor swing high areas of 27 Mar/30 Apr/08 May 2018 & 38.2% Fibonacci retracement of the on-going up move from 03 May low to today, 14 May Asian session current intraday high of 2740).

An intermediate resistance/risk level to note will be at 2760/65 which is defined by the minor swing high areas of 15/16 Mar 2018, upper boundary of a minor ascending channel in place since 03 May 2018 low & the 1.236 Fibonacci projection of the up move from 03 May 2018 low coupled with the shorter-term 4 hour Stochastic oscillator that is coming close to an extreme overbought level of 98%) where the Index faces the risk of a minor pull-back towards 2700 intermediate support (the pull-back of the former “Symmetrical Triangle” range resistance) before another potential upleg materialises to target the next resistance at 2800 (the minor swing high area of 12/13 Mar 2018 & 1.618 Fibonacci projection of the up move from 03 May 2018 low).

On the other hand, failure to hold at 2680 invalidates the bullish breakout scenario for another round of the choppy decline to retest the support of the 4-month range configuration at 2585.

Nikkei 225 – Bullish breakout above 22710

Key Levels (1 to 3 weeks)

Intermediate support: 22550

Pivot (key support): 22070

Resistances: 23000/23280 & 23550

Next support: 21000

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had staged the expected bullish breakout from the 22710 upside trigger level on last Fri, 11 May.

No change, we maintain the bullish bias above the adjusted medium-term pivotal support now at 22070 (minor swing low areas of 25 Apr/03 May 2018 & close to the 23.6 % Fibonacci retracement of the on-going up move from 23 Mar low to today, 14 May current Asian session intraday high of 22818) for a further potential up move to target the next resistances at 23000/23280 (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) follow by 23550 next (upper boundary of a minor ascending channel from 03 Apr 2018 low & Fibonacci projection cluster).

However, failure to hold at 22070 shall negate the bullish tone for a deeper slide to retest the lower boundary of the major primary ascending channel in place since Jun 2016 low now acting as a support at 21000.

Hang Seng – Impending potential bullish breakout

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 started to inch higher towards the upper limit of the neutrality zone at 31800 within its 3-month “Bottoming” configuration in place since 10 Feb 2018 low.

One positive element to note will the daily RSI oscillator that has staged a bullish breakout from its corresponding resistance at the 60% level which indicates that medium-term upside momentum of price action has resurfaced.

A clear break above 31800 (a daily close above it is preferred due to a previous failure intraday breakout seen on 21 Mar) opens up scope for a potential rally to retest its current all-time high area of 33430/530 in the first step.

ASX 200 – Uptrend remains intact

Key Levels (1 to 3 weeks)

Intermediate support: 6087

Pivot (key support): 6054/40

Resistances: 6150, 6210 & 6280

Next support: 5980/60

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) had continued push up as expected and it is now approaching the immediate resistance of 6150 (the 09 Jan 2018 swing high area that led to a 7% slide to print a Feb 2018 low of 5671).

No clear sign of bullish exhaustion yet, we maintain the bullish bias with an adjusted key medium-term pivotal support now at 6054/40 (the minor swing low areas of 03/04 May 2018, minor ascending trendline from 04 Apr 2018 low & the 23.6% Fibonacci retracement of the on-going up move from 04 Apr low to 10 May 2018 high) for another potential uleg to target the next resistances at 6210 follow by 6280 (upper boundary of minor ascending channel from 25 Apr 2018 low & Fibonacci projection cluster – see 4 hour chart).

On the flipside, failure to hold at 6054/40 negates the bullish tone for a deeper pull-back to retest 5980/60 (the pull-back support of the former “Symmetrical Triangle” range resistance).

DAX –  Bullish breakout above 12750/850

Key Levels (1 to 3 weeks)

Intermediate support: 12900/830

Pivot (key support): 12630

Resistances: 13140/150, 13245/75 & 13560

Next support: 12300/200

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) had staged the expected bullish breakout above 12850 last Wed, 09 May to print a new weekly high of 13049.

The Index is now approaching its intermediate resistance at 13140/150 (former minor swing low area of 01 Feb 2018 & 76.4% Fibonacci retracement of the recent steep decline from 23 Jan high to 06 Feb 2018 low) without any clear signs of bullish exhaustion yet except in the shorter-term, the 4 hour Stochastic oscillator is now coming close to an extreme overbought level of 98% where the Index may see a minor pull-back first at the 13140/150 intermediate resistance towards the intermediate support zone at 12900/800 (minor ascending channel support from 04 Apr 2018 low & minor swing low of 07 May 2018 -  see 4 hour chart).

Therefore, we maintain the bullish bias above an adjusted key medium-term pivotal support at 12630 and sees another potential upleg to materialise for the Index to target the next resistance at 13245/75 follow by the current all-time area of 13560.

On the other, failure to hold at 12630 invalidates the bullish breakout for another round of choppy decline towards the next support at 1230/200 (minor swing low area of 25 Apr 2018 & 50%/61.8% Fibonacci retracement of the on-going up move from 26 Mar low to 11 May 2018 high).

Charts are from City Index Advantage TraderPro