Weekly Technical Outlook on Major Stock Indices 18 Jun to 22 June 2018

S&P 500 – Risk of pull-back to test 2740 key medium-term support before new upleg

Key Levels (1 to 3 weeks)

Intermediate support: 2752

Pivot (key support): 2740

Resistances: 2800/2815 & 2824

Next support: 2680

Medium-term (1 to 3 weeks) Outlook

In the previous week, the SP 500 Index (proxy for the S&P 500 futures) had continued to inch higher as expected and almost met the medium-term resistance/target of 2800 (printed a high of 2791 on 13 Jun 2018). Click here for a recap on our previous weekly technical outlook.

The medium-term uptrend in place 03 May 2018 remains intact with its key medium-term pivotal support now at 2740 (the lower boundary of the medium-term uptrend from 03 May 2018 low, the former minor range resistance from 14/25 May 2018 & close to 23.6% Fibonacci retracement of the up move from 03 May 2018 low to 13 Jun 2018 high) coupled with positive readings seen on the respective relative strength charts of higher beta indices/sector (Nasdaq 100, Russell 2000, Semiconductor Sector, NYSE FANG+) against the S&P 500. In addition, the daily RSI oscillator of the Index remains positive above its corresponding support at the 50 level.

In the shorter-term (1 to 3 days), the Index may face the risk of a short-term pull-back towards the intermediate support at 2752/46 (the minor swing low areas of 08/06 Jun 2018). In addition, the shorter-term 4 hour Stochastic oscillator still has further potential downside before it reaches an extreme oversold level of 4.

Therefore, we maintain the bullish bias in any dips as long as the 2740 key medium-term pivotal support holds for another potential upleg to target the resistances at 2800/2815 follow by 2824 next (Fibonacci projection cluster) (refer to 4 hour chart).

On the other hand, failure to hold at 2740 negates the bullish tone for a choppy corrective decline towards the next support at 2680 (the minor swing low of 30 May 2018 that coincides with the pull-back support of the former “Symmetrical Triangle” range resistance from 29 Jan 2018 high.

Nikkei 225 – 22000 remains the key medium-term support

Key Levels (1 to 3 weeks)

Intermediate support: 22450

Pivot (key support): 22000

Resistances: 23020 & 23600/700

Next supports: 21360 & 21000

Medium-term (1 to 3 weeks) Outlook

The key elements remain unchanged for the Japan 225 Index (proxy for the Nikkei 225 futures). We maintain the bullish bias in any dips above the 22000 key medium-term support for a potential push up to retest the 23020 intermediate resistance (minor swing high areas of 21 May/12 Jun 2018) and a break above 23020 is likely to reinforce a further rally to target the next resistance at 23600/700 (close to the upper boundary of the medium-term ascending channel from 23 Mar 2018 low & 0.618 Fibonacci projection of the up move 23 Mar 2018 low to 21 May 2018 high projected from 29 May 2018 low).

However, failure to hold at 22000 shall invalidate the medium-term uptrend to kick start a multi-week corrective down move towards the next supports at 21360 and even 21000 next (61.8%/76.4% Fibonacci retracement of the up move from 23 Mar low to 21 May 2018 high & the primary major ascending channel support from Jun 2016 low).

Hang Seng – Still trapped within a multi-month range configuration

Key Levels (1 to 3 weeks)

Supports: 29070 & 28100/28000

Resistances: 31800 & 33430/530

Medium-term (1 to 3 weeks) Outlook

No major changes on its key technical elements as the Hong Kong 50 Index (proxy for Hang Seng Index futures) continued to trade in a sideways configuration below the key 31800 medium-term range resistance. Since its all-time high area of 33530 printed on 29 Jan 2018, the on-going sideways movement is now in its 5^th month, the longest consolidation since the primary uptrend started in Feb 2016.

Only a clear break above 31800 (a daily close above it is preferred due to a previous failure intraday breakout seen on 21 Mar 2018) shall open up scope for a potential impulsive upleg to retest its current all-time high area of 33430/530 in the first step. On the flipside, a break below 29070 opens up scope for a deeper corrective decline to target the longer-term key support at 28100/28000 (the key (the swing low areas of 19 Oct/07 Dec 2017 & the primary ascending trendline in place since Feb 2016 low).

ASX 200 – Minor pull-back before new potential upleg

Key Levels (1 to 3 weeks)

Intermediate support: 6070

Pivot (key support): 5980

Resistances: 6150, 6210 & 6270/80

Next support: 5850

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) had managed to push higher and almost met the resistance/target of 6150 (printed an Asian session intraday high of 6126 today, 18 Jun).

In the shorter-term (1 to 3 days), the Index faces the risk of pull-back to retest the 6070 intermediate support (former minor range resistance from 07 Jun/11 Jun 2018) as the 4 hour Stochastic oscillator has flashed a bearish divergence signal which indicates the a slow-down in upside momentum.

Therefore, as long as the 5980 key medium-term support holds (pull-back support of the former “Symmetrical Triangle” resistance from 09 Jan 2018 and the 38.2% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high), the Index may see another round of potential upleg to target the next resistance at 6210 and even 6270/280 next.

However, failure to hold at 5980 shall invalidate the medium-term uptrend to kick start a multi-week corrective down move towards the next support at 5850 (the former minor swing high areas of 27 Mar/10 Apr 2018 & close to the 61.8% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high).

DAX – Bulls need to break above 13190

Key Levels (1 to 3 weeks)

Supports: 12630 & 12300/200

Resistances: 13190 & 13560

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) had managed to stage a rally to hit the 13180/275 resistance zone/target (printed a high of 13186 on 15 Jun 2018) reinforced by ECB’s dovish stance announced on its recent monetary policy meeting last Thurs, 14 Jun to keep its policy interest rates at record low levels till 2019.

In the shorter-term, the technical picture gets murky again as last week’s gain has been wiped out in today, 18 Jun European session on the back of a looming trade war between U.S. and China. The key medium-term support at 12630 still holds (the former 3-month range resistance of the “Bottoming” configuration from 07 Feb/24 Apr 2018 the 38.2% Fibonacci retracement of the up move from 26 Mar low to 22 May 2018 high), thus prefer to turn neutral first between 13190 (minor swing high areas of 22 May/15 Jun) and 12630.

Only a break above 13190 reinforces another potential upleg to target the current all-time high area at 13560. On the flipside, failure to hold 12630 (a daily close below it) shall trigger a deeper corrective down move towards the next support at 12300/200 (swing low area of 25 Apr 2018, 61.8% Fibonacci retracement of the up move from 26 Mar low to 22 May 2018 high & the primary ascending trendline in place since Feb 2016 low).

Charts are from City Index Advantage TraderPro & eSignal