weekly technical outlook on major stock indices 13 mar to 17 mar uptrend remains intact for sp 500 1

S&P 500 – 2338 remains the support to watch for another upleg

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Key Levels (1 to 3 weeks)

Intermediate support: 2354

Pivot (key support): 2338

Resistances: 2411 & 2425

Next support: 2260

Medium-term (1 to 3 weeks) Outlook

Last week, the U.S. S&P 500 Index (proxy for the S&P 500 futures) had continued to stage the pull-back from its current all-time high of 2401 to print a low of 2354. Overall, it managed to hold above the predefined 2388 medium-term pivotal support and staged a rebound on last Friday, 13 March 2017 with a close at 2372. Click here for a recap on our previous weekly technical outlook report.

Technical elements remain positive as follow;

• The daily RSI oscillator has started to inch up from its ascending support in place since 30 December 2016 which suggests a revival of upside momentum after five days of decline in price action from the 2401 current all-time high.
• Based on the Elliot Wave Principal and fractal analysis, the Index is likely to have completed the minor degree corrective down move wave 4 that ended with a low of 2354 printed on 09 March 2017, U.S. session and last Friday, 10 March 2017’s uptick is likely to start of the minor degree bullish impulsive wave 5 to complete the intermediate degree bullish impulsive wave 3/ in place since 04 November 2016 low of 2084. Potential end targets of the expected wave 3/ stands at 2411 and 2425.
• From a sector rotation perspective, the leading Financials sector ETF (XLF) since post U.S. presidential election is still exhibiting bullish technical elements. It has continued to hold above the 24.60 short-term pivotal support and formed a daily bullish “Hammer” candlestick pattern based on last Friday’s closing price. These observations suggest a potential bullish reversal above the 24.60 support which reinforces the start of a potential new upleg for the S&P 500.

Therefore, as long as the 2338 medium-term pivotal support holds, the Index is likely to shape another potential up move within the “melt-up” phase to target the next resistance at 2411.

On the other hand, failure to hold above 2338 is likely to put the bulls on hold for a deeper slide towards the next support at 2260.

Nikkei 225 – Potential down move below 19700/735 range resistance

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Key Levels (1 to 3 weeks)

Pivot (key resistance): 19700/735

Supports: 19400 & 19190/150

Next resistance: 19860/20000 (key long-term resistance)

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) had inched higher but it remained below the upper limit of the predefined neutrality range at 19700 as per highlighted in our previous weekly technical outlook report (click here for a recap).

Interestingly in today’s Asia session (13 March 2017), the Index has started to inch upwards and printed a current intraday high of 19665 which is just 0.17% below the 19700 range top in place since 09 January 2017. Technical elements are now advocating for a potential push down within a range configuration.

• Since the low of 18645 printed on 18 January 2017, the Index has started to evolve within an impending bearish “Ascending Wedge” configuration with the upper boundary at 19700/735 and its lower boundary at 19190/150.
• Based on the Elliot Wave Principal and fractal analysis, the Index has undergone three sets of 3 wave movement of a minor degree within the “Ascending Wedge” from the 18 January 2017 low, labelled as a*, b* and c*. A typical bearish “Ascending Wedge” seen within a larger degree corrective structure tends to take a minimum form of five sets of 3 wave movement (a-up, b-down, c-up, d-down & e-up). Current price action is likely to kick start the wave d* down move with its potential end target at 19190/150 (76.4% retracement of the prior up move from 27 February 2017 low of 18993 to the wave c* high and the lower ascending trendline from 18 January 2017 low).
• The daily RSI oscillator has failed to break above its resistance in place since 26 January 2017 which indicate a lack of upside momentum of price action.
• Based on intermarket analysis  from the USD/JPY, last Friday (10 March 2017) push up in price action has tested the medium-term range top of 115.35/116.00 and ended with a daily bearish “Shooting Star” candlestick pattern at the end of the U.S. session. This observation suggests that the recent up move from range bottom of 111.60 seen on 28 February 2017 low faces the risk of an exhaustion where further potential gains is likely to be capped below 115.35/116.00.  Therefore, given its direct correlation with the Nikkei 225, any further upside movement in the Index is likely to be capped as well.
• The significant medium-term resistance stands at 19700/735 which is defined by the upper boundary of the “Ascending Wedge” and a Fibonacci projection cluster (see 4 hour chart).

Therefore, as long as the 19700/735 medium-term pivotal resistance is not surpassed, the Index is likely to shape a down move within the “Ascending Wedge” to target 19400 before 19190/150 (“Ascending Wedge” support).

On the other hand, a clearance above 19735 may invalidate the preferred bearish scenario for a further squeeze up to test the 19860/20000 key long-term resistance.

Hang Seng Index – 24070 remains the resistance to watch

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Key Levels (1 to 3 weeks)

Intermediate resistance: 23750

Pivot (key resistance): 24070

Supports: 23100/22820 & 22650/550

Next resistance: 24580 & 25480

Medium-term (1 to 3 weeks) Outlook

Last week, the Hong Kong 50 Index (proxy for Hang Seng Index futures) had continued to inch lower as expected and printed a low of 23411 in the European session of 09 March 2017. Click here for a recap on our previous weekly technical outlook report.

In today’s Asian session (13 March 2017), the Index has staged a push up by 0.7% from its opening level of 23615 to challenge the intermediate resistance at 23750 (descending trendline from 23 February 2017 high).

Technical elements remain unchanged and the Index is now likely to undergo a potential retracement (dead cat bounce) of the recent down move from 23 February 2017 high to last Thursday low of 23411. As long as the 24070 medium-term pivotal resistance is not surpassed, the Index may shape another down leg to target the next support at 23100/22820.

However, a clearance above 24070 is likely to jeopardise the preferred bearish tone to see a squeeze up to retest the “Double Top” resistance area of 24580.

ASX 200 – Remains capped below 5830/50 resistance

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Key Levels (1 to 3 weeks)

Intermediate resistance: 5780

Pivot (key resistance): 5830/50

Supports: 5674 & 5580/70

Next resistance: 6000 (key long-term resistance)

Medium-term (1 to 3 weeks) Outlook

During last Friday (10 March 2017) European session, the Australia 200 Index (proxy for the ASX 200 futures) had staged the push up as expected (dead cat bounce). Click here for a recap on our previous weekly technical outlook report.

It also attempted to stage a bullish breakout above the 5780 intermediate resistance (descending trendline from 16 February 2017 high) as it printed a high of 5789 but reintegrated back below the descending trendline resistance thereafter.

Technical elements remain negative and last Friday’s U.S. session price action is considered as a failure bullish breakout.

• The recent up move from 01 March 2017 low of 5674 stalled right at the 76.4% Fibonacci retracement of the decline from 16 February 2016 high of 5828 and tested the descending trendline resistance.
• The daily RSI oscillator remains below a descending trendline resistance in place since early January 2017 which suggests a lack of upside momentum in price action.

Therefore, we are maintaining our medium-term bearish bias. As long as the 5830/50 medium-term pivotal resistance is not surpassed, the Index is likely to shape a potential downleg to retest the 01 March 2017 swing low at 5674 before targeting the impending “Double Top” neckline support of 5580/70.

However, a clearance above 5850 is likely to invalidate the preferred bearish scenario to see a squeeze up towards the 6000 key long-term resistance.

DAX – Mixed elements, turn neutral

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Key Levels (1 to 3 weeks)

Resistances: 12100, 12200 & 12410

Supports: 11900 & 11465/30

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) continued to trade sideways within its previous swing high of 12100 printed on 03 March 2017 and the intermediate range support of 11900.  Even though it remained below the 12200 medium-term pivotal resistance, current technical elements are mixed to justify the start of a potential downleg at this juncture.

• Since its swing low of 11465 printed on 07 February 2017, the Index has started to evolve within a potential medium-term bearish “Ascending Wedge” configuration with its lower boundary acting as a support at 11900. The top (upper boundary) of the “Ascending Wedge” stands at 12200 which now confluences with predefined medium-term pivotal resistance highlighted two weeks ago.
• Based on the Elliot Wave Principal and fractal analysis, a typical bearish “Ascending Wedge” seen within a larger degree bullish impulsive structure tends to take a minimum form of five sets of 5 wave movement (i-up, ii-down, iii-up, iv-down & v-up) of a minor degree. The Index is likely to have completed a wave i, ii and it is now in the midst to complete the wave iii up move with potential end target at the 12100/12200 zone.
• The shorter-term (4 hour) Stochastic oscillator has exited from its oversold region and still has room to manoeuvre to the upside before it reaches an extreme overbought level. These observations suggest that upside momentum has resurfaced for a potential push up in price action in the short-term.

Thus, we prefer to turn neutral now in the medium-term between 12200 and 11900. Only a daily close below 11900 is likely to trigger a bearish movement to target the next support at 11465/30 (recent congestion swing lows seen from 17 January 2017 to 07 February 2017).

Charts are from City Index Advantage TraderPro & eSignal

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