Technical Analyst, Saxo Bank
Summary: ASX 200 bounced from 7K. Bull trend could resume
Hang Seng uptrend continues but a minor correction could occur
China A50 close to test key resistance at 13,500. Make or break ?
S&P ASX 200 bounced from 6,900 breaking bullish out of its short-term falling channel formation. Trend is still down however and remains so until ASX200 can close above 7,167.
RSI showing negative sentiment after it closed below 40 threshold 3rd January and if ASX 200 slides back below 7K the down is set to resume with the index likely to drop to strong support at around 6,785.
If ASX 200 closes above 7,167 it is likely to move higher to test December highs.
Hang Seng got rejected at the upper rising trend line in the rising channel formation the Index has been trading in the past couple of months. The uptrend is still intact though and with positive RSI and no divergence there Is still room for further upside to strong resistance at 22,415.
However, a correction should be expected where Hang Seng is likely to test the lower rising trendline.
Weekly RSI closed above 60 indicating Hang Seng could move higher in coming weeks. If Hang Seng breaks above 22,450 the uptrend could extend to 25K. For Hang Seng to reverse the medium-term uptrend a close below 19,300 is needed.
FTSE China A50 (Future) is close to test the resistance at around 13,500. It is also testing the upper falling medium-term trendline – see weekly chart. If closing above both the short-term uptrend is extended and medium-term trend is confirmed to be up. 200 weekly SMA and especially 15K will be strong resistance levels for A50.
However, RSI hasn’t yet closed above 60 on the weekly meaning the strength indicator could cut the uptrend short. Just a minor warning to keep an eye on.
If A50 slides back to close below 12,696 the uptrend has been reversed.
RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
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