Category: Japan & Korea

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ASX and Asia fall

The ASX 200 retreated more than 2.0% Monday after the Cyprus deposit grab unsettled financial markets. Expect another test of support at 4980. Breakout would warn of a correction, while recovery above 5150 would signal an advance to 5500*. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure.
ASX 200 Index

* Target calculation: 5000 + ( 5000 – 4500 ) = 5500

Dow Jones Japan Index dropped about 1.5%. Follow through below short-term support would indicate no more than retracement to the rising trendline.
Dow Jones Japan Index
Dow Jones Hong Kong Index has fallen about 2.0% so far. Breach of support at 472 signals a correction.
Dow Jones Hong Kong Index
Dow Jones Singapore Index has fallen 1.0% in the morning and we can expect further weakness in the p.m.
Dow Jones Singapore Index

European markets are likely to open lower. If the US follows and finishes the day with a weak close, negative sentiment could start to feed on itself, tipping global markets into a correction. Overall, the primary trend in the US and Australia remains positive.

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Forex: Euro declines while Aussie follows through

The euro retreated below support at $1.30, indicating a correction to primary support at $1.2650. A 63-day Twiggs Momentum trough close to zero would suggest a primary advance, with a long-term target of $1.50*.
Aussie Dollar/USD

* Target calculation: 1.35 + ( 1.35 – 1.20 ) = 1.50

Pound sterling found short-term support against the dollar but the long-term target for the decline is $1.43*. Declining 63-day Twiggs Momentum, below its 2011 lows, strengthens the signal.
Aussie Dollar/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar followed through after breaking out above $1.03, signaling a rally to $1.06. Reversal below $1.02 is now unlikely, but would warn that primary support at $1.015 is again under threat. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market.

Aussie Dollar/USD

The Canadian Loonie found medium-term support at $0.97 against the greenback, but we should still expect a test of primary support at $0.96. Failure would warn of a decline to $0.90*, but respect is just as likely and would signal a rally to $1.02.
Aussie Dollar/USD

* Target calculation: 0.96 – ( 1.02 – 0.96 ) = 0.90

The US dollar continues to advance against the Japanese Yen, suggesting that the 30-year down-trend is over. Expect resistance at ¥100, with a possible correction back to ¥90, but breakout would test the 2007 high above ¥120*.
Aussie Dollar/USD

* Target calculation: 100 – ( 100 – 80 ) = 120

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Asia finds support

Japan’s Nikkei 225 Index broke through its medium-term target of 12000. Selling pressure failed to materialize and the index is headed for its long-term target of 14000*.

Nikkei 225 Index

* Target calculation: 11000 + ( 11000 – 8000 ) = 14000

India’s Sensex found support at 18800. Penetration of the declining trendline indicates a rally to 20200. Breakout would signal a primary advance to 21000*, but bearish divergence continues to warn of selling pressure. Reversal below 19000 would warn of a correction to the primary trendline at 18000.

Sensex Index

* Target calculation: 20 + ( 20 – 19 ) = 21

Singapore’s Straits Times Index continues to consolidate below resistance at 3300. Buying support at 3250 is evident from higher volume at the 3250 level. Breakout above 3300 would signal a fresh primary advance, with a long-term target of the 2007 high at 3900*.

Straits Times Index

* Target calculation: 3300 + ( 3300 – 2700 ) = 3900

Hong Kong’s Hang Seng Index correction found support at 22500. Declining 13-week Twiggs Momentum indicates selling pressure. Expect another test of 22500; failure would signal a test of the primary trendline at 21000.
Hang Seng Index

* Target calculation: 22 + ( 22 – 18 ) = 26

China’s Shanghai Composite also found support, at 2250. Respect would indicate another test of resistance at 2450, while failure would indicate a down-swing to primary support at 1950/2000. Rising 13-week Twiggs Momentum suggests a primary up-trend; a trough above zero would strengthen the signal. Breakout above 2450 would confirm.
Shanghai Composite Index

* Target calculation: 2450 + ( 2450 – 2250 ) = 2650

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Forex: Aussie consolidates above primary support while Euro weakens

The euro is testing medium-term support at $1.30. Breach of the rising trendline against the greenback already warns of trend weakness; failure of $1.30 would test primary support at $1.25. Reversal of 63-day Twiggs Momentum below zero would warn of a primary down-trend, while a trough above zero would suggest another advance, with a target of $1.42*.
Aussie Dollar/USD

* Target calculation: 1.36 + ( 1.36 – 1.30 ) = 1.42

Pound sterling broke long-term support at $1.53 against the greenback, offering a target of $1.43*. Fall of 63-day Twiggs Momentum below 2011 lows strengthens the signal.
Aussie Dollar/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar is consolidating between $1.02 and $1.03 after respecting primary support at $1.015. Breakout above $1.03 and the declining trendline would suggest a rally to $1.06. Reversal below $1.02 would warn that primary support is again under threat. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market.

Aussie Dollar/USD

The Canadian Loonie is headed for a test of primary support at $0.96. Breach of support would offer a long-term target of $0.90*, but respect is just as likely and would signal a rally to $1.06.
Aussie Dollar/USD

* Target calculation: 0.96 – ( 1.02 – 0.96 ) = 0.90

The US dollar has broken its long-term declining trendline against the Japanese Yen, suggesting that the 30-year decline is over and the greenback likely to appreciate for some time. Advance to ¥100 is likely to be followed by a correction to test new support at ¥90 before breakout to test the 2007 high around ¥120*.
Aussie Dollar/USD

* Target calculation: 100 – ( 100 – 80 ) = 120

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Asia: Japan advances while India & China retreat

Japan’s Nikkei 225 Index broke its 2010 high of 11500, indicating continuation of the primary advance to 12000*. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Expect a correction to test the new support levels at 11000, possibly 10000.

Nikkei 225 Index

* Target calculation: 10000 + ( 10000 – 8000 ) = 12000

India’s Sensex broke support at 19000, warning of a correction to the primary trendline at 18000. The sharp fall on 13-week Twiggs Money Flow, following a bearish divergence, confirms strong selling pressure.

Sensex Index

* Target calculation: 19 + ( 19 – 18 ) = 20

Singapore’s Straits Times Index retreated from resistance at 3300. Expect support at 3200; failure would warn of a correction. Another trough above zero on 13-week Twiggs Momentum would suggest that the primary up-trend is intact. Breakout above 3300 would offer a target of the 2007 high at 3900*.

Straits Times Index

* Target calculation: 3300 + ( 3300 – 2700 ) = 3900

Hong Kong’s Hang Seng Index correction is headed for a test of secondary support at 22000 but is still some way above the primary trendline — and support — at 21000. A 13-week Twiggs Momentum trough above zero would suggest a healthy primary up-trend.
Hang Seng Index

* Target calculation: 22 + ( 22 – 18 ) = 26

China’s Shanghai Composite is also on the retreat, testing secondary support at 2250. Failure would indicate a down-swing to primary support at 1950/2000. Reversal of 13-week Twiggs Momentum trough below zero would warn of another primary decline, with a long-term target of 1500*.
Shanghai Composite Index

* Target calculation: 2000 – ( 2500 – 2000 ) = 1500

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US & Asia: Contrasting economic activity

While Fedex broke through long-term resistance at $100, signaling rising activity in North America….
Fedex
The Harpex index of container shipping (charter) rates, primarily for movement of finished goods, is close to its 2009 low. There is no indication of a resurgence in exports between Asia and the West.
Harpex Container Index

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Forex: Euro and Sterling retreat while Aussie Dollar rebounds

The euro broke medium-term support at $1.32 and the rising trendline against the greenback. While this indicates trend weakness it does not necessarily mean reversal to a primary down-trend. Completion of a 63-day Twiggs Momentum trough above zero would suggest that the trend is intact — and an advance to $1.42* is on the cards.
Aussie Dollar/USD

* Target calculation: 1.36 + ( 1.36 – 1.30 ) = 1.42

Pound sterling broke long-term support at $1.53 against the greenback, offering a long-term target of $1.43*. Fall of 63-day Twiggs Momentum below -5% (its 2011 low) would strengthen the signal.
Aussie Dollar/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

Against the euro, the pound is testing support at €1.15. 63-day Twiggs Momentum well below zero suggests a strong down-trend. Failure of support would offer a target of the 2011 low at €1.10.
Aussie Dollar/USD

The Aussie Dollar respected primary support at $1.015. Recovery above $1.03 and the declining trendline would suggest another rally to test $1.06. Reversal below $1.02 would warn that primary support is under threat.

Aussie Dollar/USD
Failure of primary support would offer a target of $0.96*. Oscillation of 63-day Twiggs Momentum close to zero, however, suggests a ranging market.
Aussie Dollar/USD

* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96

The Canadian Loonie by contrast is in a strong primary down-trend against the greenback, headed for a test of $0.96. Falling 63-day Twiggs Momentum suggests that medium-term support at $0.97/$0.98 is unlikely to hold.
Aussie Dollar/USD
The US dollar has broken its long-term declining trendline against the Japanese Yen, suggesting that the 30-year decline is over and the greenback likely to appreciate for the foreseeable future. Follow-through above ¥100 would confirm, offering a target of ¥120*.
Aussie Dollar/USD

* Target calculation: 100 – ( 100 – 80 ) = 120

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Asia: India retreats while Japan and Singapore advance

India’s Sensex is headed for a test of support at 19000. Breach of the secondary trendline already warns of a correction to the primary trendline around 18000. Bearish divergence on 13-week Twiggs Money Flow, followed by reversal below zero, indicates strong selling pressure.

Sensex Index

* Target calculation: 19 + ( 19 – 18 ) = 20

Singapore’s Straits Times Index is consolidating in a narrow range below 3300 — a bullish sign — and 21-day Twiggs Money Flow oscillating above zero indicates buying pressure. Breakout above 3300 would signal an advance to the 2007 high at 3900*. Reversal below 3250 is unlikely but would warn of a correction.

Straits Times Index

* Target calculation: 3300 + ( 3300 – 2700 ) = 3900

Japan’s Nikkei 225 Index is again testing its 2010 high of 11500. Reversal below 11000 would suggest a correction to 10000, while breakout would offer an initial target of 12000*.

Nikkei 225 Index

* Target calculation: 10000 + ( 10000 – 8000 ) = 12000

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Asia: India & Japan retreat

India’s Sensex displays a bearish divergence on 13-week Twiggs Money Flow, warning selling pressure. Breach of the secondary trendline — and medium-term support at 19500 — would indicate a correction to 18000.

Sensex Index

* Target calculation: 19 + ( 19 – 18 ) = 20

Japan’s Nikkei 225 Index is retreating from its 2010 high of 11500 on the monthly chart. Reversal below 11000 would suggest a correction to 10000. Respect of support, however, would indicate a fresh primary advance.

Nikkei 225 Index

* Target calculation: 11000 + ( 11000 – 8000 ) = 14000

China’s Shanghai Composite Index was closed last week for Chinese New Year.

Hong Kong’s Hang Seng Index re-opened Thursday, finding support at 23000.  Breakout above 24000 would test the 2010 high of 25000.  Troughs high above the zero line on 13-week Twiggs Money Flow indicate buying pressure. Reversal below 23000 is unlikely but would warn of a correction.

Shanghai Composite Index

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