Nikkei 225, Hang Seng 50 and Shanghai Composite Forecasts – Asian Indices Approaching Resistance in Bullish Momentum

Nikkei 225 Technical Analysis

The Nikkei 225 has pulled back a bit during the trading session on Friday, testing the crucial 58,800-yen level for support. This is an area that I think continues to be important to watch, and ultimately, if we do bounce from here, I think you could have a move back to the 60,000-yen level. Ultimately, the weakening Japanese yen has a lifting effect on this market as exports get a lot cheaper in an export driven economy. With this, I am looking for a bounce to take advantage of. I don’t have any real interest in shorting the Nikkei 225 anytime soon.

Hang Seng 50 Technical Analysis

The Hang Seng 50 in Hong Kong is approaching the 26,250 level, an area that has been a bit of a barrier as of late. Breaking above there opens up the possibility of a move to the 26,500 level as an area that I think a lot of people have seen caused problems in both directions, and the pullback, I think, probably still has a bit of an overhang there.

To the downside, we have the 50-day EMA and the 200-day EMA both offering support, and therefore, I think you have a situation where traders are looking for value, and this could set up on a short-term pullback. Right now, we are more or less in consolidation with more of an upward drive.

The Shanghai Composite Index

The Shanghai Composite Index looks like it is trying to figure out what to do next. We are getting close to the 4,800 level, which was a major ceiling earlier this year. We are trying to break out of a short-term consolidation with the 50-day EMA underneath, offering a bit of a floor.

Breaking above the 4,800 level could open up a much bigger move, but in the meantime, short-term pullbacks I think get bought into looking for signs of value. A drop and a bounce get you on the right-hand side of the V, but remember, Shanghai does tend to be very volatile so position sizing will be crucial.