Weekly Technical Outlook on Major Stock Indices 06 Nov to 10 Nov 2017

S&P 500 – Eyeing another potential all-time high

Key Levels (1 to 3 weeks)

Intermediate support: 2573

Pivot (key support): 2565

Resistances: 2600 & 2620

Next supports: 2544, 2520 & 2489/87

Medium-term (1 to 3 weeks) Outlook

Last week, the U.S SP 500 Index (proxy for the S&P 500 futures) had staged an initial pull-back towards the 2570/65 predefined intermediate support as per highlighted in our previous weekly outlook (printed a low of 2565 on Thurs, 02 Nov)

Thereafter, it staged a recovery to retest its current all-time high level of 2588 (close to our intermediate resistance/target of 2590). Click here for a recap on our previous weekly technical outlook. 

Current key technical elements remain positive which gives us the justification to maintain our bullish bias. As long as the tightened key medium-term pivotal support at 2565 holds (last week’s low, the lower boundary of the medium-term ascending channel from 29 Aug 2017 low & a Fibonacci retracement cluster), the Index is likely to shape another potential impulsive bullish upleg to target the next resistances at 2600 follow by 2620 next.

On the other hand, failure to hold above 2565 may see a deeper slide to retest 2544 and only a daily close below 2544 shall open up scope for a potential multi-week corrective decline scenario towards the next supports at 2520 follow by 2489/80 in the first step.

Nikkei 225 –  Uptrend in extension phase above 22300/22000 support

Key Levels (1 to 3 weeks)

Intermediate support: 22300

Pivot (key support): 22000

Resistances 22760 & 23080

Next supports: 21200 & 20470

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had rallied towards the medium-term resistance/target of 22500 as expected (printed a high of 22637 on last Fri, 03 Nov U.S. session). Click here for a recap on our previous weekly technical outlook. 

 The Index had a fantastic home run since 28 August 2017 low where it recorded successive positive weekly closes and it soared by 18% to last Fri, 03 November 2017 high of 22637. This is the second best performance since the Brexit low of 14835 printed on 24 June 2016 where the best performance recorded a gain of 22% from 06 November 2016 low to 18 December 2016 high.

Current technical elements suggest that the medium-term uptrend in place since 28 August 2017 low is in an extension phase.

• The previous bearish divergence signal seen in the daily RSI oscillator has been invalidated through the break of the 75% level (depicted in dotted pink). This observation suggests that upside momentum of price action remains intact.
• The key medium-term support now rests at 22000 which is defined by the lower boundary of the medium-term ascending channel from 08 September 2017 low , former minor swing high area of 27 October 2017 and the 23.6% Fibonacci retracement of the rally from 27 September 2017 low to 03 November 2017 high.
• The next significant medium-term resistance stands at 23080/260 zone which is defined by a Fibonacci projection cluster and close to the upper boundary of the medium-term ascending channel from 08 September 2017 low.

Therefore, as long as the tightened 22000 medium-term pivotal support holds, the Index is likely to shape another round of potential bullish impulsive upleg to target the next resistances at 22760 and 23080 next.

However, a break below 22000 shall trigger a potential multi-week corrective decline towards the next supports at 21200 and 20470 next (close to 61.8% Fibonacci retracement of the current advance from 29 Aug 2017 low).

Hang Seng – Bearish “Head & Shoulders” invalidated, further potential upside

Key Levels (1 to 3 weeks)

Intermediate support: 28340

Pivot (key support): 28240/28000

Resistances 28800, 29100/130 & 29300

Next support: 26830

Medium-term (1 to 3 weeks) Outlook

Last week, the Hong Kong 50 Index (proxy for Hang Seng Index futures) had managed to clear above the 28545 bearish “Head & Shoulders” invalidation level on Friday, 03 November 2017.

In today’s Asian opening session (04 Nov), the Index had plummeted by 1.6% within one hour to print a low of 28128 (right at the predefined 28240/28000 medium-term support as per highlighted last week) as the market digested the weekend’s remarks made by PBOC central banker,  Zhou Xiaochuan reiterated his warnings on the financial risks in China’s financial system. Interestingly, the Index has staged a “V” recovery and almost recouped its initial losses in today’s afternoon Asian session (04 Nov).

Technical analysis suggests a clear “bear trap” for this laggard (as it traded sideways for the past two weeks versus the S&P 500, Nikkei 225 & DAX that had made new marginal higher highs).

Another important technical element to highlight is that today’s (06 Nov) Asian morning session plunge stalled right at the pull-back support of a former minor descending trendline from 16 October 2017 high (depicted in dotted green on the 4 hour chart) and the lower boundary of the medium-term ascending channel from 05 July 2017 low. These observations suggest that there are bullish forces at play right above the 28240/28000 support.

Therefore, as long as the 28240/28000 key medium-term pivotal support holds, the Index is likely to see the start of a potential bullish impulsive upleg to target the next resistances at 29100/130 and 29300 next.

However, failure to hold above 28000 shall invalidate the bullish scenario to kick start a multi-week corrective decline towards the next support at 26830 (close to 23.6% Fibonacci retracement of the advance from 28 Dec 2016 low to 16 Oct 2017 high & the ascending trendline from 28 Dec 2016 low).

ASX 200 – Upleg in progress

Key Levels (1 to 3 weeks)

Intermediate support: 5927

Pivot (key support): 5890

Resistances: 6000 & 6065

Next support: 5800

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) had rallied as expected as it shrugged off the recent negative localised political climate in Australia that saw Deputy Prime Minster Barnaby Joyce disqualified from his parliament seat due to dual citizenship issues. The Index hit the predefined intermediate resistance/target of 5950 (printed a high of 5980 in last Fri, 03 Nov U.S. session).

Key technical elements remain positive, thus we maintain the bullish bias above a tightened key medium-term pivotal support now at 5890 (swing low areas of 24/27 Oct 2017 & close to the 23.6% Fibonacci retracement of the on-going advance from 04 Oct 2017 low) for a further potential up move to target the next resistances at 6000 follow by 6065 next (upper boundary of the medium-term ascending channel from 04 Oct 2017 low & the 0.764 Fibonacci projection of the up move from 04 Oct 2017 low to 20 Oct 2017 high projected from 27 Oct 2017 low).

On the other hand, failure to hold above 5890 shall put the bulls on hold to see a deeper pull-back to retest the 5800 pull-back support of the former 4-month range configuration resistance.

DAX – Medium-term uptrend remains intact

Key Levels (1 to 3 weeks)

Intermediate support: 13360

Pivot (key support): 13200

Resistances: 13560 & 13730

Next supports: 12900

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) had shaped the expected upleg and hit the lower limit of the medium-term resistance/target of 13435/560 (printed a high of 13505 on last Fri, 03 Nov). Click here for a recap on our previous weekly technical outlook. 

Current technical elements are still positive without any signs of bullish exhaustion. Thus, we maintain the bullish bias with a tightened key medium-term pivotal support now at 13200 (lower boundary of the medium-term ascending channel from 29 Aug 2017 low & 50% Fibonacci retracement of the recent rally from 26 Oct 2017 low to 03 Nov 2017 high). The next significant medium-term resistance stands at 13780 (Fibonacci projection cluster & close to the upper boundary of the aforementioned medium-term ascending channel).

On the other hand, failure to hold above 13200 shall negate the bullish tone to see a deeper slide to retest the 12900 support (former medium-term swing high areas of 05 May/21 Jun 2017 & 38.2% Fibonacci retracement of the on-going medium-term uptrend from 29 Aug 2017 low to 03 Nov 2017 high).   

Charts are from City Index Advantage TraderPro

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