Weekly Technical Outlook on Major Stock Indices 01 Oct to 05 Oct 2018

S&P 500 – 2940 remains the key resistance to watch

Key Levels (1 to 3 weeks)

Pivot (key resistance): 2940

Supports: 2860 (trigger) & 2790

Next resistance: 3000/3010

Medium-term (1 to 3 weeks) Outlook

Last week, the SP 500 Index (proxy for the S&P 500 futures) had traded in a tight range 0.95% (the smallest range since the week of 16/20 Jul 2018) and ended the week with a small loss of 0.27%. Click here for a recap of previous weekly technical outlook.

Interestingly, it ended the month of Sep 2018 with a “Spinning Top” candlestick pattern coupled with a bearish divergence seen in the monthly RSI oscillator below an extreme overbought level of 87% that as recorded in May 1996. These observations suggest that the sentiment of the bulls has started to show signs of weariness.

No change, 2940 remains the key long-term pivotal resistance to watch and a break (an daily close) below 2860 is likely to reinforce a potential multi-week decline to target the next support at 2790 (the former resistance of the 3-month range configuration from 12 Mar 2018 & 61.8% Fibonacci retracement of the up move from 28 Jun 2018 low of 2691 to its current all-time high of 2941 printed on 21 Sep 2018).  

On the other hand, a clearance above 2940 shall see an extension of the blow off move to target the next resistance at 3000/3010 (Fibonacci projection cluster & psychological).

Nikkei 225 – Challenging the 24200 range resistance

Key Levels (1 to 3 weeks)

Resistances: 24200 & 24880

Supports: 23000, 22240 & 21850

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had pushed higher and challenged the 24200 medium-term range resistance (swing high of 23 Jan 2018 which is also a 26-year high since Oct 1991) as it printed a high of 24293 on last Fri, 28 Sep but failed to have a daily close above 24200.

In today 01 Oct Asian session, it has staged another attempt to breach above 24200 (printed a current intraday high of 24320 as at 11.00 a.m S’pore time). However, elements are mix at this juncture with the shorter-term 4-hour Stochastic oscillator that has flashed a bearish divergence signal at its overbought region.

Therefore, we maintain the neutrality stance and only a daily close above 24200 validates a further potential up move to target the next resistance at 24880 (Fibonacci cluster + upper boundary of a minor ascending channel in place since 07 Sep 2018 low). On the flipside, a reintegration back below 23000 translates into a failure bullish breakout for a further potential decline to retest the 21850 support (the primary ascending channel support from Jun 2016 low).

Hang Seng – Medium-term downtrend remains intact below 28000

Key Levels (1 to 3 weeks)

Pivot (key resistance): 28000

Supports: 27400 (trigger), 26100 & 25640/500

Next resistances: 29100 & 30100

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had traded sideways below the 28000 key medium-term pivotal resistance with no major changes on its key technical elements.

Therefore, maintain bearish bias as long as the 28000 pivotal resistance is not surpassed and a break below 27400 (minor ascending trendline from 11 Sep 2018 low & former minor swing areas of 13/14 Sep 2018) is likely to reinforce the start of potential impulsive downleg to retest the 11 Sep 2018 swing low area of 26100 before targeting 25640/500 next (Fibonacci projection cluster & swing low area of 05 Jul 2017).

On the other hand, a clearance above 28000 negates the bearish tone for a squeeze up towards the 29100/30100 range resistance in place since 26 Jul 2018.

ASX 200 – Watch the “bearish flag” support at 6170

Key Levels (1 to 3 weeks)

Intermediate resistance: 6212

Pivot (key resistance): 6250

Supports: 6170 (trigger), 6100 & 5980

Next resistance: 6350/80

Medium-term (1 to 3 weeks) Outlook

Last week, the Australia 200 Index (proxy for the ASX 200 futures) continued to churn within the “bearish flag” ascending range configuration in place since 07 Sep 2018 swing low area of 6100.

No major changes on its key technical elements below the 6250 key medium-term pivotal resistance (the pull-back resistance of the former “Expanding Wedge” range support & 50% Fibonacci retracement of the recent decline from 30 Aug 2018 high to 07 Sep 2018 low). Bears need to have a break (an hourly close) below the lower limit of the “bearish flag” now acting as a support at 6170 to trigger the start of a potential impulsive downleg to retest the 6100 swing low area in the first step.

On the other hand, a clearance above 6250 negates the bearish view for a squeeze up to retest the 6350/80 top (11/30 Aug 2018 swing high areas).

DAX – Further potential downside below 12540 key medium-term resistance

Key Levels (1 to 3 weeks)

Pivot (key resistance): 12540

Supports: 12125 (downside trigger) & 11800

Next resistance: 12890

Medium-term (1 to 3 weeks) Outlook

The 1.5% push up seen in the Germany 30 Index (proxy for the DAX futures) from its minor low of 12270 on 27 Sep 2018 has stalled right below the upper boundary/resistance of the medium-term descending channel in place since 14 Jun 2018 high (printed a high of 12460 on 27 Sep, U.S. session).

No major changes on its key technical elements. We maintain the bearish bias below the 12540 key medium-term pivotal resistance (also the pull-back resistance of the former primary ascending trendline support from Feb 2016 low) and a break (an hourly close) below 12125 is required to reinforce the start of a potential impulsive downleg to target the 11800 neckline support of the impending major “Head & Shoulders” bearish reversal configuration in place since 20 Jun 2017.

On the other hand, a clearance above 12540 negates the bearish tone for another round of choppy up move to retest the 12890 swing high area of 27 Jul 2018.

Charts are from City Index Advantage TraderPro & eSignal