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Weekly Technical Outlook on Major Stock Indices 11 Feb to 15 Feb 2019

S&P 500 - Watch the 2740 level



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Key Levels (1 to 3 weeks)

Resistances: 2740 & 2815 (long-term pivot)

Supports: 2600, 2450 & 2340

Medium-term (1 to 3 weeks) Outlook

In the first half of last week, the SP 500 Index (proxy for the S&P 500 futures) had breached above the 2700/10 key medium-term pivotal resistance as it printed a high of 2739 on 05 Feb 2019 before it started to drift down for the rest of week and closed below 2710 on last Fri, 08 Feb. It ended the U.S. session at 2706. Click here for recap on our previous weekly outlook report.

Mix elements at this juncture where momentum indicators are showing signs of bullish exhaustion where the daily RSI oscillator has stalled and reversed down from a corresponding resistance and overbought level of 72. In addition, the 4-hour Stochastic oscillator has flashed a bearish divergence signal at its overbought region.

Prefer to turn neutral now first between 2740 and 2600 in terms of directional bias (refer to 4-hour chart). Only a break below 2600 is likely to reinstate the medium-term bearish tone for a further decline to retest 2450 and 2340 (26 Dec 2018 swing low).

On the flipside, a clearance 2740 sees a further push up to challenge the 2815 key medium-term pivotal resistance (highlighted in our Q1 2019 Global Markets Outlook).

Nikkei 225 – Bounce before potential fresh down move



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Key Levels (1 to 3 weeks)

Intermediate resistance: 20700

Pivot (key resistance): 21020

Supports: 20200 (trigger), 19320 & 18970

Next resistances: 22780 & 23050 (long-term pivot)

Medium-term (1 to 3 weeks) Outlook

The recent rebound seen in the Japan 225 Index (proxy for the Nikkei 225 futures) since its 26 Dec 2018 swing low of 18970 has managed to stage a bearish reaction right at the 21020 key medium-term pivotal resistance. It printed a high of 20983 on 05 Feb 2019 (U.S. session) before it declined by 3.8% to hit a low of 20185 on last Fri, 08 Feb (U.S. session) which made it the worst performing major index that in our coverage for last week.

Before the end of last Fri, 08 Feb U.S. session, the Index has managed in inch up and close above the 20200 medium-term downside trigger level. Overall, no major changes as the Index has continued to evolve within a medium-term downtrend phase in place since 01 Oct 2018 swing high.

In the shorter-term (1 to 3 days), the Index has appeared to have completed a minor downleg phase from last Tues, 05 Feb 2019 high of 20983 in terms of Elliot Wave/fractal analysis and right now it is likely to undergo a minor rebound towards the intermediate resistance zone of 20600/700 supported also by the momentum reading seen in the 4-hour Stochastic oscillator. It has reversed up from its oversold region and still has further room to manoeuvre to the upside before it reaches an extreme overbought level.

No change, maintain bearish bias with 21020 remains as the key medium-term pivotal resistance and break below 20200 reinforces the bearish tone for a further potential down move to retest 19320 and 26 Dec 2018 swing low area at 18970.

On the other hand, a clearance above 21020 invalidates the bearish scenario for an extension of the rebound towards the 16 Oct/03 Dec 2018 range resistance zone of 22780/23050.

Hang Seng – 28000/215 remains the key resistance to watch



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Key Levels (1 to 3 weeks)

Pivot (key resistance): 28000/215 (excess)

Supports: 26740 (trigger), 27070 & 25200/25000

Next resistances: 29100 & 29510 (long-term pivot)

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has continued to hover below the 28000 key medium-term pivotal resistance where it printed an intraday high of 28215 on 01 Feb 2019 before it traded back below 28000 last week after the Chinese New Year holidays.

No major changes on its key technical elements. We maintain the bearish bias for a potential push down towards the lower limit of the complex range in place since 26 Oct 2018 low of 24487 (also its 52-week low. 2800/215 key medium-term pivotal resistance and a break below 26740 reinforces potential push down to retest 27070 and the 25200/25000 support of range configuration in place since 26 Oct 2018 low.

On the other hand, a clearance above 28000/215 invalidates the bearish scenario for an extension of the rebound towards 29100 and even the 29510 long-term pivotal resistance as per highlighted in our Q1 Global Markets Outlook

ASX 200 – Drifted up towards 6150/200 key resistance



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Key Levels (1 to 3 weeks)

Pivot (key resistance): 6150/200 (long-term pivot)

Supports: 5920 (trigger) & 5700

Next resistance: 6380

Medium-term (1 to 3 weeks) Outlook

The on-going rebound seen in the Australia 200 Index (proxy for the ASX 200 futures) from is 23 Dec 2018 swing low of 5415 has continued to inch higher and it has rallied by 13% to print a high of 6107 on 07 Feb 2019.

The rally has managed to pause at the former major ascending channel support from 10 Feb 2016 low now turns pull-back resistance which is just below the 6150/200 key long-term pivotal resistance as per highlighted in our Q1 2019 Global Markets Outlook. Interestingly, the in past three days since its 07 Feb 2019 high, the Index has formed a series of daily “Doji” candlestick patterns which indicates “hesitation” by the bulls to push prices higher. In addition, the daily RSI oscillator has reached an overbought region where its price action now faces the risk of a mean reversion to the downside.

Flip to a bearish bias with 6150/200 as the key pivotal resistance and a break below 5920 is required to open up scope for the bears to push the Index lower to target the next support at 5700 in the first step.

On the other hand, a clearance above 6200 invalidates the bearish scenario for an extension of the rebound to retest the 17 Aug 2018 swing high area of 6380, also the 52-week high.

DAX – Bullish exhaustion below key resistance



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Key Levels (1 to 3 weeks)

Intermediate resistance: 11150

Pivot (key resistance): 11390/540

Supports: 10700 & 10180

Next resistance: 11800 (lower limit of long-term pivot)

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) has shown signs of bullish exhaustion below its key medium-term pivotal zone of 11390/540 (the major descending trendline from 14 Jun 2018 high & 38.2% Fibonacci retracement of the recent medium-term decline from 14 Jun 2018 high to 26 Dec 2018 low)

  • The Index has formed a weekly bearish candlestick that has a weekly close below the 50% of the previous long bullish candlestick range formed on 14/18 Jan 2019 after the emergence of a bearish “Hanging Man” and Spinning Top” seen two weeks ago.
  • The Index has staged a breakdown below the support of the minor “bearish flag” configuration in place since 26 Dec 2018 low.
  • The weekly RSI oscillator remains bearish below its significant resistance at the 45 level.

In the shorter-term, the Index may stage a minor rebound first towards the 11150 intermediate resistance (50% Fibonacci retracement of last week’s slide from its 11390 high to last Fri, 08 Feb low of 10862) with the 4-hour Stochastic oscillator that has further room to inch higher before it reaches an extreme oversold level. Flip to a bearish bias below 11390/540 key medium-term pivotal resistance for a further potential decline towards the next support at 10700 and a break below it exposes the 26 Dec 2018 swing low area of 10180.

On the hand, a clearance above 11540 put the bears on hold for an extension of the corrective rebound towards the 11800 major resistance (the former neckline support of the major “Head & Shoulders” bearish breakdown).

Charts are from City Index Advantage TraderPro & eSignal









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