the week ahead for major stock indices 23 nov to 27 nov 2015 1778252015

Key Takeaways

• Major stock indices have continued to surge higher (between 4% to 6%) after the initial gapped down in price actions seen on last Monday, 16 November 2015 as the markets digested the aftermath of the unfortunate acts of terrorism that occurred in Paris.
• The German DAX and the U.S. S&P 500 has staged a bullish breakout from their intermediate resistances at 11050 and 2070/2073 respectively. The laggard, Hong Kong’s Hang Seng Index is now testing a “stubborn” resistance at 22870 and its technical elements are advocating for a potential bullish breakout as it catches up with its peers, especially the China A50.
• Based on the Elliot Wave Principal with a combination of other technical analysis elements, the major stock indices are now resuming their potential bullish impulsive wave structure in place since the “Black Monday”, 24 August 2015 low after the medium-term pull-back/consolidations seen from early November 2015 are likely to have concluded on last Monday, 16 November 2015 lows.

Nikkei 225

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Intermediate support: 19650/19530

Pivot (key support): 19190

Resistance: 20050/20190 & 20850/20960

Next support: 18650/18400

Medium-term (1 to 3 weeks) Outlook

The Japan 225 (proxy for the Nikkei 225) has inched up higher towards last week’s expected upside target at the 20050/20190 zone (printed a high of 19965).

Technical elements remain positive and any potential pull-back is likely to be held by the 19650/19530 intermediate support zone (also the lower boundary of the bullish ascending channel in place since 29 September 2015 low) before another potential upside movement occurs to target the intermediate resistance zone of 20050/20190 before the significant resistance at 20850/20960.

On the other hand, failure to hold above the 19190 weekly pivotal support may see a pause in the medium-term uptrend for a deeper pull-back towards the pull-back support area of the “Inverse Head & Shoulders” bullish breakout at 18650/18400.

Hang Seng Index

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Pivot (key support): 22260/22180

Resistance: 22870 & 23530 & 24000

Next support: 20290/20070

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 40 Index (proxy for the Hang Seng Index) has started to inch up higher from the key pull-back support zone (weekly pivot) of the “Double Bottom” bullish breakout at 22260/22180. It is now testing the “stubborn” trendline resistance at 22870 that has capped previous advances thrice since the high of 26 May 2015.  Right now, a clear break above the 22870 potential upside trigger level is likely to unleash a potential rally to retest the 23 October 2015 swing high at 23530 before targeting the next resistance at 24000.

However, a break down below the key 22260/22180 weekly pivotal support is likely to invalidate the expected bullish tone to see a deeper decline to retest the swing lows area of 24 August and 29 September 2015 at 20290/20070.

FTSE China A50

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Intermediate support: 10400

Pivot (key support): 9800

Resistance: 11480/11970

Next support: 8960

Medium-term (1 to 3 weeks) Outlook

Bullish technical view remains unchanged as per highlighted last week. The China A50 Index (proxy for the FTSE China A50) has managed to hold right above the lower boundary (support) of the bullish ascending channel now at 10400 in place since the “Black Monday” 24 August 2015.

Overall, technical elements are still advocating for a further potential upside movement to target the 11480/11970 resistance zone. On the flipside, failure to hold above the 9800 weekly pivotal support may damage the medium-term uptrend to see a decline towards the next support at 8960.

DAX

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Intermediate support: 11000/10880

Pivot (key support): 10700

Resistance: 11220 & 11670

Next support: 10380

Medium-term (1 to 3 weeks) Outlook

Last week, the German 30 Index (proxy for the DAX) has surged higher as expected and almost met our weekly expected target at 11220 (printed a high of 11165).

Technical elements remain positive. Right now, any potential pull-back in price action is likely to be held by the intermediate support zone of 11000/10880 which is the former trendline resistance drawn from the current all-time high of 13 April 2015 with a maximum limit set at the 10700 weekly pivotal support before another round of potential upside movement occurs to target the next resistance at 11670.

On the other hand, failure to hold above the 10700 pivotal support may negate the bullish tone for a deeper slide to retest the critical pull-back support of the “Double Bottom” bullish breakout at 10380.

S&P 500

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Pivot (key support): 2070/2062

Resistance: 2138 & 2165

Next support: 2040 & 1994

Medium-term (1 to 3 weeks) Outlook

The U.S. SP 500 Index (proxy for the S&P 500) has shaped the expected recovery from the pull-back support area of the “Double Bottom” bullish breakout and surged higher as it broke above a short-term resistance zone of 2070/2073.

Technical elements remain positive. Right now, the weekly pivotal support will be at 2070/2062 which is the pull-back support area of the former short-term trendline resistance for another round of potential rally to test the multi-month range top (current all-time high) at 2138 and even the next resistance at 2165 (defined by the upper boundary of the ascending channel in place since 29 September 2015 low and 0.618 Fibonacci projection of the upmove from 29 September 2015 low to 04 November 2015 high projected from 16 November 2015 low).

On the other hand, failure to hold above the 2070/2062 weekly pivotal support is likely to negate the bullish tone to see a slide to test the next support at 2040. Only a break below 2040 is likely to trigger a further decline towards 1994, the critical pull-back support of the “Double Bottom” bullish breakout.

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