Weekly Technical Outlook on Major Stock Indices 12 Nov to 16 Nov 2018

S&P 500 – No clear signs of bottoming

Key Levels (1 to 3 weeks)

Resistances: 2825 & 2864/70

Supports: 2762, 2603 & 2540/30

Medium-term (1 to 3 weeks) Outlook

Last week, the SP 500 Index (proxy for the S&P 500 futures) had staged a breakout above the 2745 key medium-term pivotal resistance on Wed, 07 Nov post U.S. mid-term elections which put hold the preferred bearish impulsive down move (click here for a recap). Despite the breakout of 2745, we had argued in an updated report published on Thurs, 08 Nov (click here for the details) that the up move is more likely an extension of the corrective rebound in place since 29 Oct low triggered by panic buying rather that a process of “bullish bottoming”.

Since there the last update on 08 Nov, there is no major changes on its key technical elements where the bears need to have a daily close below 2762 to trigger a potential fresh impulsive down move to retest the recent 29 Oct 2018 low of 2603 before targeting the long-term downside trigger level of 2540/30 (Feb/Apr 2018 swing low areas).

However, a clearance above 2825 sees a continuation of the squeeze up towards the next resistance at 2864/70 (76.4% Fibonacci retracement of the decline from 21 Sep 2018 high to 29 Oct 2018 low & the former medium-term swing high area of 26/29 Jan 2018.

Nikkei 225 – Watch the 23000 resistance

Key Levels (1 to 3 weeks)

Resistances: 23000 & 24200/500

Supports: 21840, 20800 & 20550/330

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had a daily close above last week’s 22030 key medium-term pivotal resistance which invalidated the impulsive down move scenario target the next support at 20550/330.

Price action of the Index has reintegrated back above the major ascending channel support in place since Jun 2016 low after a bearish breakdown from it on 24 Oct 2018. Meanwhile, the daily RSI oscillator (a momentum indicator) is still holding (yet to break above) at the significant corresponding resistance at the 60/50 level.

Mix elements at this juncture, prefer to turn neutral first between 23000 (the multi-month range resistance in place since 21 May 2018) and 21840 (the major ascending channel support from Jun 2018 low). Only a daily close below 21840 reignites the bears for a potential fresh impulsive down move to retest 20800 (26/30 Oct swing lows) before targeting the next support at 20550/330.

On the flipside, a clearance above 23000 sees an extension of the corrective rebound towards the 24200/500 major range resistance in place since 23 Jan 2018 which is also a 27-year since Oct 1991.

Hang Seng – Start of a potential fresh impulsive down move

Key Levels (1 to 3 weeks)

Intermediate resistance: 26110 (gapped down seen on 09 Nov)

Pivot (key resistance): 26700

Supports: 25090 & 24360/24000

Next resistance: 28000

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had staged the expected minor corrective to bring a high of 26613 on last Thurs, 08 Nov right below the predefined 26700 key medium-term pivotal resistance as per highlighted in our previous weekly technical outlook report.

Interestingly, the Index has reversed down right below 26700 and formed a daily bearish “Dark Cloud Cover” candlestick pattern at the end of 8 Nov U.S. session coupled the daily RSI oscillator that has also turned down from a significant corresponding resistance at the 50/60 level. These observations suggest a revival of downside momentum.

Therefore, it is likely that the Index has completed its minor corrective rebound phase and if the 26700 key medium-term pivotal resistance is not surpassed, the next motion is a potential impulsive down move to retest 25090 intermediate support before target the next medium-term support at 24360/24000 (Fibonacci projection & close to the medium-term descending channel support from 07 Jun 2018 high).

However, a daily close above 26700 invalidates the preferred bearish scenario for an extension of the corrective rebound towards the 28000 major resistance (pull-back resistance of the former major ascending trendline support from Feb 2016 low & 21 Sep 2018 swing high).

ASX 200 – Recent rebound stalled right below 5950/5990 key resistance

Key Levels (1 to 3 weeks)

Intermediate resistance: 5950

Pivot (key resistance): 5990

Supports: 5875 (trigger), 5745 & 5560

Next resistance: 6115

Medium-term (1 to 3 weeks) Outlook

The corrective rebound has stalled righted below the key medium-term resistance zone of 5950/5990 as per highlighted earlier. In addition, the daily RSI oscillator has flashed an impending bearish divergence signal at its overbought region.

No change, we maintain the bearish bias below the 5990 key medium-term pivotal resistance and adjusted the downside trigger level up to 5875 (taking into account of the minor ascending trendline in place since the start of the corrective rebound on 26 Oct 2018 low). A break below 5875 reinforces the start of another potential impulsive down move to retest the 5745 intermediate support before targeting the next medium-term support at 5560.

However, a clearance above 5990 invalidates the bearish scenario for an extension of the corrective rebound to retest the 6115 resistance (former swing low of 07 Sep 2018).

DAX – Watch the 11400 downside trigger

Key Levels (1 to 3 weeks)

Pivot (key resistance): 11600/690

Supports: 11400 (trigger), 11050 & 10800/700

Next resistance: 11800/900

Medium-term (1 to 3 weeks) Outlook

Last week’s corrective rebound seen in the Germany 30 Index (proxy for the DAX futures) has managed to stall at the 11600/690 key medium-term pivotal resistance as expected.

Maintain bearish bias below the 11600/690 key medium-term pivotal resistance (also coincides now with the upper boundary of the minor descending channel from 04 Oct 2018 high) with 11400 as the downside trigger to reinforce the start of another potential impulsive down movement to retest 11050 before targeting the next support at 10800/700.

However, a daily close above 11600 invalidates the bearish scenario for an extension of the corrective rebound to retest 11800/900 (the neckline resistance of major Head & Shoulders bearish reversal breakdown).

Charts are from eSignal & City Index Advantage TraderPro