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Asian Markets Reflect Selling Pressure

By Colin Twiggs
November 2, 3:00 a.m. ET (6:00 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.


The Dow shows signs of rising selling pressure, echoed in major North American and European markets. Asia-Pacific markets opened sharply lower on Monday, with only the Shanghai Composite recouping early losses. Expect further weakness (Monday) in Europe and North American markets. An FTSE 100 fall below 5000 and Dow below 9500 would confirm the secondary correction.

China

The Shanghai Composite Index gapped down at the open, but rallied to test resistance at 3050 by early afternoon.

Shanghai Composite Index China

Source: Yahoo Finance

Bearish divergence on Twiggs Money Flow (21-day) warns of continued selling pressure. Reversal below 3000 would indicate another test of primary support at 2700. Breakout above 3100 would signal an advance to 3500.

Shanghai Composite Index China

The Hang Seng Index continues to test the rising trendline. Twiggs Money Flow (21-day) holding above zero indicates buying support: expect the primary up-trend to continue. Recovery above resistance at 22000 would signal a primary advance with a target of 23500*. Reversal below the rising trendline is unlikely, but would warn that the up-trend is weakening.

Hang Seng Index Hongkong

* Target calculation: 22000 + ( 22000 - 20500 ) = 23500

India: Sensex

The Sensex is undergoing a secondary correction, the sharp fall on Twiggs Money Flow (21-day) indicating strong selling pressure. Expect a test of 15000.

Sensex India

Japan: Nikkei

The Nikkei 225 fell as low as 9743 early Monday before recovering to 9800 by mid-afternoon. Declining Twiggs Money Flow (13-week) indicates selling pressure. Failure of support at 9600 would signal a primary down-trend.

nikkei 225 japan

* Target calculation: 10600 + ( 10600 - 9600 ) = 11600

South Korea

The Seoul Composite is undergoing a secondary correction, testing support at 1550 early Monday afternoon. Bearish divergence on Twiggs Money Flow (21-day) confirms selling pressure. Expect a test of support at 1450.

Seoul Composite Index

Australia: ASX

The All Ordinaries reversed below 4600, confirming a secondary correction. Bearish divergence on Twiggs Money Flow (21-day) warns of strong selling pressure. Initial target for a correction is the Fibonacci 50% retracement level at 4300*, but primary support is a lot lower: at 3700.

ASX All Ordinaries

* Target calculation: 4900 - ( 4900 - 3700 ) = 4300

The ASX 200 also signals a correction, with a break below 4600. Twiggs Money Flow (13-week) retreat below 20% would indicate rising selling pressure.

ASX 200


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