weekly technical outlook on major stock indices 02 may to 05 may sp 500 dax may see new all time hig

S&P 500 – Further potential upside towards a new all-time high

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Key Levels (1 to 3 weeks)

Intermediate support: 2380

Pivot (key support): 2370

Resistances: 2400 & 2418

Next supports: 2358 & 2326/21

Medium-term (1 to 3 weeks) Outlook

Last week, the U.S. S&P 500 Index (proxy for the S&P 500 futures) had staged a bullish break above the 2380 level which validated the bullish scenario. Current key technical elements are as follow:

• The daily RSI oscillator of the Index has remained above its support and still has further room to manoeuvre to the upside before it reaches an extreme overbought level. These observations suggest that medium-term upside momentum of price action remains intact.
• The significant resistances stands at 2400 (current all-time high area & the aforementioned minor ascending channel resistance) follow 2418 (1.618 Fibonacci projection of the up move from 27 Mar 2017 low  to 06 Apr 2017 high projected from 17 Apr 2017 low – potential minor degree impulsive wave 3 target based on  the Elliot Wave Principle)
• One the leading sectors, the S&P 500 Technology sector ETF (XLK) that has outperformed the S&P 500 since November 2016 (post U.S. president election) has continued to rally in the past 5 days after its bullish breakout above its 53.62 medium-term resistance on 24 April 2017. Technical elements are still positive which supports a further potential push up towards the 55.45/57.00 key long-term resistance zone.
• The key medium-term support now rests at 2370 for the Index which is defined by the lower boundary of an ascending channel in place since 17 April 2017 low, former minor range top area of 30 March/05 April 2017 and the 38.2% Fibonacci retracement of the recent rally from 17 April 2017 low to 26 April 2017 high.

Therefore as long as the 2370 medium-term pivotal support holds, the Index is likely to see another potential upleg to retest the 2400 current all-time high area before targeting the next resistance at 2418.

On the other hand, failure to hold above 2370 may jeopardise the preferred bullish tone to see a deeper slide towards the 2358 gap support and a break below 2358 is likely to trigger a further decline towards 2326/21 swing low area of 27 March/17 April 2017

Nikkei 225 – Risk of a setback below 19700

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Key Levels (1 to 3 weeks)

Intermediate resistance: 19500

Pivot (key resistance): 19700

Supports: 19150 & 18845/640

Next resistances: 19860/20000

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) had surged above the 19100 (excess) medium-term pivotal resistance buoyed by optimism from the results of the 1^st round French presidential election where opinion polls had indicated a victory for centrist, pro-business Macron over far-right, anti-Euro Le Pen when the face off in the final round this coming Sunday, 07 May.

A lighter trading environment is expected for this week as the Japan stock market will close for the “Golden Week” holidays from Wed, 03 May to Friday, 05 May. In this morning, 02 May Asian session, the Index has continued to push up and hit the alternate scenario target/resistance at 19350.  Please click here for a recap on our previous weekly technical outlook report.  Do take note that the Nikkei 225 futures will still be trading via CME Globex during the “Golden Week” holidays.

Current key technical elements are as follow:

• The on-going rebound from 17 April 2017 low of 18205 which saw a rally of 1.3% is now below a significant resistance zone of 19500/700.
• The aforementioned resistance zone of 19500/700 is defined by a confluence of elements. The descending trendline from its major swing high area of June 2015, the pull-back resistance of a former ascending trendline from 24 June 2016 low, the medium-term range top in place since 20 December 2016 high and the 76.4/1.00 Fibonacci projection of the recent up move from 17 April 2017 low to 24 April 2017 high (see daily & 4 hour charts).
• The daily RSI oscillator remains bullish as it seems has some room left to manoeuvre to the upside before it reaches an extreme overbought level. However, the shorter-term (4 hour) Stochastic oscillator has reached an extreme overbought level which suggests that the current upside momentum of price action is being overstretched. These observations suggest that in the short to medium-term (1 to 3 weeks), price action of the Index faces the risk of a setback/consolidation.
• The significant medium-term support rest at the 18845/640 zone which is defined by the gap (left by the recent 1^st round French presidential election) and the 50%/61.8% Fibonacci retracement of the recent rally from 17 April  2017 low.
• Based on intermarket analysis, the USD/JPY has also rallied towards the 112.00/112.20 former range support now turns into a pull-back resistance where a setback/consolidation may occur. Given USD/JPY’s direct correlation with the movement of Nikkei 225, any potential decline in USD/JPY is likely to translate into a similar down move in the Nikkei 225.

Therefore as long as the 19700 medium-term pivotal resistance is not surpassed, the Index may see setback towards 19160 and a break below it opens up scope for a deeper decline towards the 18845/640 support.

However, a clearance above 19700 is likely to invalidate the preferred setback scenario to see a continuation of its relentless climb towards the key long-term resistance of 19860/20000.

Hang Seng Index – Bullish break from range, further upside potential

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Key Levels (1 to 3 weeks)

Intermediate support: 24450

Pivot (key support): 24150

Resistances: 25135

Next supports: 23720 & 23100/22820

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had managed to stage a bullish breakout from its expanding range consolidation in place since 21 March 2017 which validated the bullish scenario.

Current key elements are as follow:

• The significant medium-term resistance rests at 24150 which is defined by the pull-back support of the recent bullish range breakout and the 61.8% Fibonacci retracement of the current up move in place since 19 April 2017 low (see 4 hour chart).
• The daily RSI oscillator remains bullish above its support and still has potential room to manoeuvre to the upside before it reaches an extreme overbought level. This observation suggests that medium-term upside momentum of price action remains intact.
• The significant medium-term resistance stand at 25135 follow by 25480 which is defined by a Fibonacci projection cluster and the upper boundary of a minor ascending channel in place since 09 March 2017 low.
• The shorter-term (4 hour) Stochastic oscillator has inched downwards and still shows further potential downside before it reaches an extreme oversold level. This observation highlights the risk of a short-term pull-back in price action of the Index.

Therefore, the Index may see a minor pull-back first towards 24450 with a maximum limit set at the 24150 medium-term pivotal support before another upleg materialises to target the next resistances at 25135 and 25480.

On the other hand, failure to hold above 24150 may negate the preferred bullish tone to see a further slide towards the next support at 23720 (the lower boundary of the minor ascending channel & the minor swing low of 19 April 2017).

ASX 200 – Coming close to 6000 key resistance, turn neutral

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Key Levels (1 to 3 weeks)

Resistances: 6000 & 6260/80

Supports: 5893 & 5800

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) had continued to push higher as expected and it is now coming close to the key long-term resistance of 6000 (see weekly chart), 0.7% away from today (02 May) current intraday high of 5956.

Therefore, we have decided to turn neutral for now below the key long-term resistance of 6000 because there are no clear bearish exhaustion signals. Please click here for a recap on our previous weekly technical outlook report

Only a break below 5893 is likely to open up scope for a corrective decline to towards the former range top from 09 January to 15 March 2017 now turns into a pull-back support at 5800.

On the other hand, a clearance above 6000 may trigger a further rally to target the next resistance at 6260/80.

DAX – On sight for a potential new all-time high

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Key Levels (1 to 3 weeks)

Intermediate support: 12420

Pivot (key support): 12360

Resistances: 12650 & 12820/900

Next supports: 12090 & 11865/20

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) has continued to hover near its all-time high level of 12512 printed on 25 April 2017 without any clear bearish exhaustion signals. Current key technical elements are as follow:

• The key medium-term support rests at 12360 which is defined by the former swing high area of 03 April 2017 and the 23.6% Fibonacci retracement of the recent rally from 20 April 2017 low to 25 April 2017 high (see 4 hour chart).
• Recent price action has staged a breakout above a minor “bullish flag” continuation flag pattern (depicted in dotted purple) now turns pull-back support at 12420 (see 4 hour chart).
• The significant medium-term resistances now stand at 12650 and 12820/900 which is defined by Fibonacci projection clusters and close to the upper boundary of medium-term ascending channel in place since 09 November 2016 low (see daily chart).

Therefore, as long as the 12360 medium-term pivotal support holds, the Index is likely to stage another potential upleg towards the next resistance at 12650 and a break above it may open up scope for a potential further up move to target 12820/900 next.

However, failure to hold above 12360 may invalidate the preferred bullish view for a deeper setback towards the 12090 gap support.

Charts are from City Index Advantage TraderPro & eSignal

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