Technical Analysis: Asia Markets – Key resistance level remains unbroken. Range bound expected May 18, 2020 1070

  • Our report on 27th April 2020 indicates that the Asia market remains bearish.
  • Albeit to a lesser extent, the Asian market experienced a second week of sell-down after a strong rebound 2 weeks ago.
  • However, the Asia market remains range-bound after a failed attempt to rally past the indicated resistance level of 20,237.07 for Nikkei 225, 24,583.80 for Hang Seng Index and 2,669.40 for Straits Time Index.
  • Price should remain range-bound for before a subsequent sell-off.


Nikkei 225 tried to break the 50.0% retracement level but was met with failure after last week’s bearish closure below the major resistance level at 2,037.07. As such, we believe that the Nikkei 225 has completed its sub-wave 4 movement and Nikkei will further slide towards 15,010.93 – 15,746.32 support zone.

Should prices break above the resistance level, the next immediate target for a sell-off will be at 61.8% of wave (iii) at 21,152.48.


Hang Seng Index wave analysis remains unchanged as the supposed wave (iv) has not broken the resistance level of 24,583.80. The downtrend is still entrenched, with the ‘death-cross’ formation still valid as prices have been trending below the 200- and 50-Moving Average line. Furthermore, the descending channel has yet to be invalidated. Hence, we believe prices will enter a period of ranging before resuming its downside to the lower bound of the support zone at 20,472.63.


The daily chart for the Hang Seng Index shows a clearer picture of likely price movement and signs of a range-bound market is apparent. Firstly, the bearish candle closed as a Doji candle on Friday, signaling a loss in the selling momentum. Hence, the price will likely head for a short rally before a sell-down again. This movement will likely continue for a period and the sell-off will resume when prices break the 23,500 psychological support level.


Xiaomi rebounded from the buying zone of $9.20 – $9.50 on the 19th of March shortly after our report on 17th March and the stock was ranging between $9.78 – $10.80 from 30th April 2020 to 6th May 2020 after the rebound. Strong bullish momentum was seen after prices rallied towards $12.30 on Friday’s peak but the stock rejected the resistance level at $12.04. Hence, we believe that the stock might entering a retracement when market opens on Monday, 18th May. Two demand levels at $10.68 – $10.34 and the previous buying level of $9.20 – $9.50 will be the key buying levels in the mid-term.


Tencent rallied after the long-legged Doji formation which we stated on our report in 20th March 2020. The rally was stronger than expected with price breaking the resistance level at $421.20 and Tencent begin to exhibit signs of reversal at 127.2% extension level of $325.20 – $419.80. As such, the potential rebound will be at the support zone 1 between $412.20 – $406.60. Should this support zone be invalidated, the next support zone between $382.00 – $389.40 will be the next target for the continued rally.


The weekly chart indicates that prices were unable to clear above the resistance level of 38.2% retracement level of wave (iii) at 2,669.40. Hence, the STI will likely fall to 2,500 before a rebound to retest the resistance level. Should the resistance level at the 38.2% retracement level be broken, we will see price test the 50% retracement level of wave (iii) at 2,811.80.


The daily chart shows a potential sub-bearish flat correction and the confirmation of whether STI will head for a flat corrective wave depends on whether the prices can break above the 2,500 support level. If so, prices will head towards the support zone between 2,200 – 2,267 before a 5 sub-wave up towards the 50% retracement level of wave (iii) as indicated in the weekly chart.


SGX’s strong rally saw a strong breakout at $10.00 psychological resistance level with prices testing the yearly high at $10.72. On our report on 8th of May, we see subsequent correction sees price testing the major support at $9.39 and 50% Fibonacci retracement level from $7.97 – $10.72, effectively forming a double-bottom.

Prices are seeing consolidation after a strong bullish engulfing candle formation. The consolidation is likely to form a potential bullish flag and key support remains at 61.8% and 50% retracement level of $9.40 – $10.03.


Valuetronics’ strong bullish momentum invalidated the bearish reversal signal which we posted on 13th May 2020. After the strong upside, on Wednesday, the stock formed a graveyard Doji formation. However, to say that the bear has returned is too premature as prices are still trending above the 200 Moving Average. Hence, the immediate support zone between $0.619 – $0.645 is a key rebound zone to test the $0.745 immediate resistance.


Hi-P’s strong rise had experienced a continued rally as mentioned on our report update on 4th May with prices testing the resistance zone at $1.13-$1.20 region after a rebound at $1.00 psychological support level. Prices remain to trade below the 200 Moving Average but is well above the 50 Moving Average. Hence, there is possibility of the stock prices correcting towards the key support zone at $0.900 – $0.934.


However, there is a strong possibility that the stock may break higher upon market open and should that happen, the stock will most likely validate a bullish flag and test the next resistance at the $1.40 price level.

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