Market News & Analysis

Top Story

Weekly Technical Outlook on Major Stock Indices: Residual push up to complete medium-term top

S&P 500 – Coming close to a potential medium-term top



click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate support: 2967

Pivot (key support): 2954

Resistances: 3003 & 3045 (Fibonacci expansions)

Next supports: 2904 & 2870

Medium-term (1 to 3 weeks) Outlook

Last week, the SP 500 Index (proxy for the S&P 500 futures) has continued to surge upwards to print another fresh all-time high level of 3000 on 04 Jul, Asian session which is closed to our first upside target/resistance of 3003 as per highlighted in our previous weekly outlook report (click here for a recap).

Bulls now got to be cautious in the medium-term as the price action of the Index has completed two-third of the bearish “Ascending Wedge” in place since 03 Jun 2019 low of 2728 with a bearish divergence signal seen in the daily RSI oscillator at its overbought region.

These observations suggest that upside momentum has started to ease. Elliot Wave/fractal analysis suggests that the Index may see a residual push up before a multi-week corrective down move materialises (approximately 8% to 10%).

Therefore, we maintain the bullish bias with a tightened key medium-term pivotal support at 2954 for a potential residual push up to target 3003 and 2954. However, a daily close below 2954 invalidates the residual push scenario to kick start the corrective down move sequence towards the next supports at 2904 and 2870 in the first step.

Nikkei 225 – 21340 is the key support to watch to maintain residual push up



click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate support: 21560

Pivot (key support): 21340

Resistance: 21900/22000

Next support: 20900/800

Medium-term (1 to 3 weeks) Outlook

After the recent post G20 summit gapped up of 2.3% seen on last Mon 01 Jul, the Japan 225 Index (proxy for the Nikkei 225 futures) has traded sideways for the rest of last week.

Maintain bullish bias with a tightened key short-term pivotal support now at 21340 for a potential residual push up to target the 21900/22000 resistance zone.

However, a daily close below 21340 invalidates the residual push up scenario to kick start the multi-week corrective down move sequence towards the next support at 20900/800 in the first step.

Hang Seng – Residual push up towards 29500

click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate support: 28300

Pivot (key support): 28000

Resistances: 29000 & 29500

Next support: 26700

Medium-term (1 to 3 weeks) Outlook

Last week, the Hong Kong 50 Index (proxy for Hang Seng Index futures) has staged the expected push up and met the first upside target/resistance of 29000 (printed a high of 29029 on 04 Jul).

Thereafter, it has pull-backed by -2.6%  to test the intermediate support of 28300 post U.S job data release on last Fri, 05 Jul where non-farm payrolls came in better than expected that has reduced the expectation of a 50 bps cut on the Fed funds rate on the upcoming FOMC meeting on 31 Jul.

Maintain bullish bias with 28000 as the key medium-term pivotal support for a potential residual push up to target 29500 next. However, a daily close below 28000 invalidates the bullish scenario to kick start the multi-week corrective decline towards the next support at 26700 in the first step.

ASX 200 – Residual push up above 6590 key support



click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate support: 6660

Pivot (key support): 6590

Resistance: 6815/6850

Next support: 6380

Medium-term (1 to 3 weeks) Outlook

Last week, the Australia 200 Index (proxy for the ASX 200 futures) has staged the expected bullish breakout above 6703 to print a high of 6772 on last Fri, 05 Jul.

Right now, it is undergoing a pull-back of -1.4% above its key support zone. We maintain the bullish bias with a tightened key medium-term pivotal support now at 6590 for a potential residual push up to target the next resistance zone at 6815/50 (all-time high & Fibonacci expansion cluster).

However, a daily close below 6590 invalidates the bullish scenario to kick start the multi-week corrective down move sequence towards the next support at 6380.

DAX – Residual push up above 12400 key support

click to enlarge charts

Key Levels (1 to 3 weeks)

Pivot (key support): 12400

Resistance: 12800 (Fibonacci expansion/retracement cluster)

Next support: 11900/800

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) has shaped the expected push up to print a high of 12663 on last Wed, 03 Jul U.S. session.

Maintain bullish bias with a tightened key medium-term pivotal support now at 12400 for a potential residual push up to target the 12800 resistance before a corrective down move materialises.

However, a daily close below 12400 invalidates the bullish scenario to kick start the multi-week corrective down move sequence to retest the major support zone of 11900/800.

Charts are from City Index Advantage TraderPro


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.