- Joined
- 11 September 2008
- Posts
- 35
- Reactions
- 0
Asian Markets Technical Outlook
Asian Equities' Bullish Reversal Runs Out Of Momentum
Index Strat Risk Target
NKY Flat
ASX Short 5,177 4,400
HSI Flat
Short-Term Technical Outlook
Japanese markets were closed for the Autumn Equinox holiday Tuesday, but the precedence of a sell off in other Asian economies’ equity markets, as well as a sell off through the US session, is making a drop in the Nikkei 225 a high probability. A drop on Wednesday’s open would go a long way in signifying the rebound in risk appetite from Thursday’s reversal is running out of momentum. As of right now, the dominant trend is still bearish, and the recent advance over the past two active trading days is merely a retracement in the broader market until the index can close above 12,400.
S&P/ASX 200
Long-term Technical Outlook
The ASX has fallen to a new low as well, indicating additional downside potential. The next level to watch for support is the 100% extension of 6852-5040 at 4399. The 50% retracement of the advance from the 2003 low is just below there.
Short-Term Technical Outlook
Price action from the S&P/ASX 200 was a battle between volatility and technicals. The follow through in last week’s reversal sent Monday’s candle on a massive rally that happened to close at its high for the session. This is typically a strong indication that there was still considerable buying interest in the market and at least a modest level of follow through was due on the follow day’s open. This wasn’t the case this time around however. Instead, an immediate reversal on the open showed the market was bowing to a previously untested falling trend from the May swing high. This level had further back up at the 38.2% retracement of the May to September decline and recent range high at 5,150. Now back within the index’s two month old congestion zone, the market is back in the hot seat for choosing the larger market direction. The dominant. bear trend would be confirmed with another close below 4,758; while a reversal in the making would need to surpass 5,150to really generate interest.
Hang Seng
Long-term Technical Outlook
The Hang Seng will likely continue lower to test the 50% or even the 61.8% of the advance from the 2003 low. The Fibonacci zone is 13924-16179. Watch for support from the line that is drawn off of the 1989 and 2003 lows.
Short-Term Technical Outlook
Though Monday’s close was higher than the two sessions before it, the Hang Seng was obviously starting to lose momentum as the open was the highest the index would trade for the entire session. Tuesday’s candle merely confirms the bullish drive behind last week’s reversal formation had run its course, and that volatility would give way to larger technicals. Indeed, the index stalled just below a notable 38.2% Fibonacci retracement (of the May to September bear leg) which happens to coincide with a major former support level (new resistance) around 20,100/200. Looking at Tuesday’s close (at the low for the day), bearish continuation is likely. If this is the case, volatility will look to close the Thursday/Friday gap from 17,900 to 18,800. Beyond that, bears will work with the dominant trend to eye the 18-month low 16,300.
Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can email them to John at jkicklighter@cfdtrading.com
CFDTrading.com provides free news, trading resources, and market analysis to the trading community.
Asian Equities' Bullish Reversal Runs Out Of Momentum
Index Strat Risk Target
NKY Flat
ASX Short 5,177 4,400
HSI Flat
Short-Term Technical Outlook
Japanese markets were closed for the Autumn Equinox holiday Tuesday, but the precedence of a sell off in other Asian economies’ equity markets, as well as a sell off through the US session, is making a drop in the Nikkei 225 a high probability. A drop on Wednesday’s open would go a long way in signifying the rebound in risk appetite from Thursday’s reversal is running out of momentum. As of right now, the dominant trend is still bearish, and the recent advance over the past two active trading days is merely a retracement in the broader market until the index can close above 12,400.
S&P/ASX 200
Long-term Technical Outlook
The ASX has fallen to a new low as well, indicating additional downside potential. The next level to watch for support is the 100% extension of 6852-5040 at 4399. The 50% retracement of the advance from the 2003 low is just below there.
Short-Term Technical Outlook
Price action from the S&P/ASX 200 was a battle between volatility and technicals. The follow through in last week’s reversal sent Monday’s candle on a massive rally that happened to close at its high for the session. This is typically a strong indication that there was still considerable buying interest in the market and at least a modest level of follow through was due on the follow day’s open. This wasn’t the case this time around however. Instead, an immediate reversal on the open showed the market was bowing to a previously untested falling trend from the May swing high. This level had further back up at the 38.2% retracement of the May to September decline and recent range high at 5,150. Now back within the index’s two month old congestion zone, the market is back in the hot seat for choosing the larger market direction. The dominant. bear trend would be confirmed with another close below 4,758; while a reversal in the making would need to surpass 5,150to really generate interest.
Hang Seng
Long-term Technical Outlook
The Hang Seng will likely continue lower to test the 50% or even the 61.8% of the advance from the 2003 low. The Fibonacci zone is 13924-16179. Watch for support from the line that is drawn off of the 1989 and 2003 lows.
Short-Term Technical Outlook
Though Monday’s close was higher than the two sessions before it, the Hang Seng was obviously starting to lose momentum as the open was the highest the index would trade for the entire session. Tuesday’s candle merely confirms the bullish drive behind last week’s reversal formation had run its course, and that volatility would give way to larger technicals. Indeed, the index stalled just below a notable 38.2% Fibonacci retracement (of the May to September bear leg) which happens to coincide with a major former support level (new resistance) around 20,100/200. Looking at Tuesday’s close (at the low for the day), bearish continuation is likely. If this is the case, volatility will look to close the Thursday/Friday gap from 17,900 to 18,800. Beyond that, bears will work with the dominant trend to eye the 18-month low 16,300.
Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can email them to John at jkicklighter@cfdtrading.com
CFDTrading.com provides free news, trading resources, and market analysis to the trading community.
