the week ahead 20 june 2016 1817102016

S&P 500 – 2110/21 remains the key medium-term resistance to watch

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Key Levels (1 to 3 weeks)

Intermediate resistance: 2098/100

Pivot (key resistance): 2110/21

Supports: 2054/49 & 2036

Next resistances:  2138/44

Medium-term (1 to 3 weeks) Outlook

Maintain bearish bias within range. Last week, the U.S. SP 500 Index (proxy for the S&P 500 futures) has reacted below the 2098/103 intermediate resistance (printed a high of 2098 on Mon, 13 June) and tumbled towards the expected medium-term target/support at 2058/54 (printed a low of 2049 on Thurs, 16 June). Please click on this link for a recap on our previous weekly technical outlook/strategy. New technical elements are as follow:

• The Index has continued to shape the expected minor push up from last Thursday, 16 June low of 2049. Currently, it has printed an intra-day high of 2092 in today’s Asian session (20 June) after a 0.58% gap up in the opening due to the a slight marginal lead (1% to 3%) for the “Remain” camp from fresh opinion polls released over Sunday for this Thursday’s EU referendum.
• The current push up in price action is now approaching an intermediate resistance zone of 2098/2100 which is defined by a confluence of elements (the upper limit of the range configuration in place since its all-time high on 17 May 2015 and a Fibonacci cluster) (see weekly & 4 hour charts).
• The weekly (long-term) RSI oscillator is still now right below its descending trendline resistance.
• The 4 hour (short-term) Stochastic oscillator is coming close to an extreme overbought level.
• Based on the Elliot Wave Principal and fractal analysis, the current push up in price action from yesterday’s low of 2049 is likely to be a minor corrective wave 2 with a potential cyclical high target now at 2098/100 (1.00 projection from 16 June 2016 low + 61.8% retracement from 09 June 2016 high). In addition, current readings from both short-term and long-term momentum indicators are showing “overstretched” upside momentum which highlights the risk of a downside reversal below/at the 2098/100 resistance.
• The key medium-term pivotal resistance remains at 2110/21 (excess). The “bull trap excess” of 11 points is derived from the difference between 09 June 2016 high of 2121 and the 2110 medium-term pivotal resistance that is similar in magnitude with the  “short-squeeze, bear trap” seen earlier on 19 May 2016 when the social mood was bearish due to an impending  Head & Shoulders configuration.
• The key medium-term support rests at 2036 which is defined by the range support in place since 07 April 2016 low and the 19 May 2016 “bear-trap” swing low area (see daily & 4 hour charts).

The Index is now back to a key medium-term inflection zone and as long as the medium-term pivotal resistance of 2110/21 is not surpassed, the Index is likely to see a potential downside reversal to retest last week swing low area at 2054/49 and a break below it may add impetus to target the 2036 range support in place since 07 April 2016 low.

However, a clearance above the 2110/21 medium-term pivotal resistance is likely to invalidate the expected bearish scenario for a further push up to retest the current all-time/52-week high zone at 2138/44.

Nikkei 225 – 16100/300 resistance to watch for another potential downleg

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Key Levels (1 to 3 weeks)

Intermediate resistance: 16100

Pivot (key resistance): 16300

Supports: 15330/270 & 14820/780

Next resistances: 17240 & 17700/900

Medium-term (1 to 3 weeks) Outlook

Maintain bearish bias. Last week, the Japan 225 (proxy for the Nikkei 225 futures) has declined as expected and hit the medium-term downside target/support at 15480/330 (printed a low of 15268 on Thurs, 16 June). Please click on this link for a recap on our previous weekly technical outlook/strategy. New technical elements are as follow:

• The on-going rebound from last Thursday, 15 June low of 15268 is now right below the intermediate resistance of 16100 which is defined by a confluence of elements (the pull-back resistance of the former ascending range’s support as depicted in dotted purple & the 50% Fibonacci retracement  of the recent decline from the 08 June 2016 high to last week low of 15268) (see 4 hour chart)
• The key medium-term resistance now stands at 16300 which is defined by the former minor swing low areas  of 16 May/03 June 2016, short-term descending trendline from 31 May 2016 high and close to the 61.8% Fibonacci retracement  of the recent decline from the 08 June 2016 high to last week low of 15268).
• The daily (medium-term) RSI oscillator is now right at its pull-back resistance coupled with the 4 hour (short-term) Stochastic oscillator that is coming close to an extreme overbought level. These observations suggest that the upside momentum of the current price action is being “overstretched”. Therefore, price action is likely to have reached /close to an inflection zone for a potential downside reversal.
• The key medium-term support now rests at 14820/780 which is defined by the 12 February 2016 swing low and a Fibonacci projection cluster.
• Based on intermarket analysis, the movement of Nikkei 225 has a highly positive correlation with the USD/JPY. As seen on the daily chart of the USD/JPY, technical elements remain bearish below the latest medium-term pivotal resistance of 105.55/106.40 which should be in parallel with the 16300 medium-term resistance as per highlighted on the Japan 225 (see 4^th chart).

Therefore as long as the 16300 medium-term pivotal resistance is not surpassed, the Index is likely to shape another potential downleg to retest 15330/270 before targeting the 14820/78 support.

On the other hand, a clearance above the 16300 medium-term pivotal resistance may invalidate the preferred bearish scenario for a squeeze up to retest the 31 May 2016 minor swing high at 17240 and above it is likely to trigger a further up move towards the significant 01 February/24 April swing high areas of 17700/900.

Hang Seng Index – 20820/21050 is the key resistance to watch

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Key Levels (1 to 3 weeks)

Pivot (key resistance): 20820/21050

Supports: 19880 & 19560

Next resistances: 21650 & 23500

Medium-term (1 to 3 weeks) Outlook

Maintain bearish bias within range. Last week, the Hong Kong 50 Index (proxy for the Hang Seng Index futures) has declined as expected and hit the first downside target/support at 20100 (printed a low of 19878 on Thurs, 16 June) before it staged a pushed up on last Friday. New technical elements as follow:

• The on-going push up in price action that may be due to short covering as fresh opinion polls released over Sunday for this Thursday, 23 June upcoming U.K.’s EU referendum has shown a slight marginal lead (1% to 3%) in favour for the “Remain” camp.
• Interestingly, this push up is coming close to the 20820/21050 medium-term pivotal resistance which is defined by the descending trendline in place since 26 October 2015 high and now the 61.8%/76.4% Fibonacci retracement of the current decline from 07 June 2016 high to last week low of 19878.
• The key medium-term support remains at 19560 which is defined by the 13 May/19 May minor supports that tested the former minor swing highs of 22 Feb/26 Feb 2016.
• The short-term (4 hour) Stochastic oscillator is now coming close to an extreme overbought level coupled with the daily (medium-term) RSI oscillator right below its 50% level. These observations suggest limited upside potential in price action at this juncture.

Therefore, as long as the 20820/21050 medium-term pivotal resistance is not surpassed, the Index is likely to see another potential downleg to retest 19880 before targeting the 19560 support.

However, a break above the 20820/21050 medium-term pivotal resistance is likely to negate the preferred bearish tone for a further squeeze up to retest the 14/28 April 2016 swing high at 21650.

FTSE China A50 – 9180/080 is the potential downside trigger

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Key Levels (1 to 3 weeks)

Intermediate resistance: 9550

Pivot (key resistance): 9700/840

Supports: 9180/080 & 8630/560

Next resistances: 10310

Medium-term (1 to 3 weeks) Outlook

Maintain bearish bias within range. Last week, the China A50 has pushed lower and hit the first support at 9180/080 (printed a low of 9170 on last Wed, 15 June) before it staged 4 % push up. This modus operandi has been the same for the past one month.

No change in technical elements. We keep the key medium-term resistance at 9700/840 and the Index needs to break below 9180/080 in order to trigger a deeper potential slide towards the February 2016 swing low area at 8630/560.

However, a break above the 9700/840 medium-term pivotal resistance is likely to invalidate the preferred bearish scenario to see a further squeeze up towards the next resistance at 10310 in the first step.

DAX – 10110 is the key medium-term resistance to watch

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Key Levels (1 to 3 weeks)

Intermediate resistance: 9934

Pivot (key resistance): 10110

Supports: 9530/430 & 9120/9080

Next resistances: 10350 & 10530/650 (long-term)

Medium-term (1 to 3 weeks) Outlook

Maintain bearish bias. Last week, the German 30 Index (proxy for the DAX futures) has staged a direct drop and hit the medium-term downside target/support at 9530/430 as expected (printed a low of 9431 on Thurs, 16 June). Please click on this link for a recap on our previous weekly technical outlook/strategy. New technical elements are as follow:

• The on-going push up in price action that may be due to short covering as fresh opinion polls released over Sunday for this Thursday, 23 June upcoming U.K.’s EU referendum has shown a slight marginal lead (1% to 3%) in favour for the “Remain” camp.
• Interestingly, this push up is now right at the pull-resistance of the former minor “triangle range” configuration support (depicted in dotted purple) at 9934 which also confluences with the 61.8% Fibonacci retracement of the recent steep decline from 07 June 2016 high to last week low of 9431.
• The medium-term key resistance stands at 10110 (with a slight excess of 30 points above 10080) is defined by the minor swing low area of 03 June 2016 and the 76.4% Fibonacci retracement of the recent steep decline from 07 June 2016 high to last week low of 9431.
• The daily (medium-term) RSI oscillator is now right at its pull-back resistance and the 50% level coupled with the 4 hour (short-term) Stochastic oscillator that is coming close to an extreme overbought level. These observations suggest limited upside potential at this juncture as upside momentum of price action is being “overstretched”.

Therefore, as long as the 10110 medium-term pivotal resistance is not surpassed, the Index is likely to shape another potential downleg to retest last week swing low area at 9530/9430. Only a break below 9430 may open up scope for further plunge towards the next support at 9120/9080 (minor low of 24 February 2016 & a Fibonacci projection cluster).

However, a clearance above the 10110 medium-term pivotal resistance is likely to invalidate the bearish bias for a further push up back towards the 31 May 2016 swing high of 10350 and even the long-term descending channel’s upper boundary at 10530/650.

Charts are from Advantage TraderPro & eSignal

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