Technicals

Australian Equities Ride Channel Resistance

The Nikkei broke down at the end of September but has staged a strong rally since finding a low on October 6th.  A short term resistance line is at current price and weakness off of this level would be a sign that a head and shoulders top is underway since mid July.

The S&P/ASX rally continues to ride along channel resistance.  A total of 19 days touch this channel.  The market clearly deems it worthy.  RSI remains in a divergent condition and even the final portion of the advance channels nicely (in red).  The technical condition of the uptrend is weak.  Coming below the red channel support line would be the first sign that the index has formed a top.

The Hang Seng has more than doubled since its October 2007 low.  I want to show a monthly chart in order to convey that the larger is probably still bearish.  A 5 wave move from at least the mid 1980s is complete and this bear market has only lasted 2 years.  The next move is most likely either lower or sideways (in which case the index would still consolidate at a lower level).

Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can email them to John at jkicklighter@cfdtrading.com.