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Asian recovery bullish for ASX

By Colin Twiggs
October 23rd, 2013 3:00 a.m. EDT (5:00 p.m. AET)

These extracts from my trading diary are for educational purposes. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, sell, hold or otherwise deal with any securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor. Full terms and conditions can be found at Terms of Use.


India's Sensex is testing long-term resistance at its all-time high of 21000. Expect retracement to test the new support level at 20500. Rising 13-week Twiggs Money Flow indicates buying pressure and breakout above 21000 would offer a long-term target of 24000*. Reversal below 20500 is unlikely, but would warn of another test of primary support at 18000.

Sensex

* Target calculation: 21000 + ( 21000 - 18000 ) = 24000

Rising troughs on Japan's Nikkei 225 weekly chart suggest buying pressure; 13-week Twiggs Money Flow above 30% would strengthen the signal. Breakout above 15000 would signal an advance to 17500*. Reversal below 14000 is unlikely, but would warn of a bull trap.

Nikkei 225

* Target calculation: 15000 + ( 15000 - 12500 ) = 17500

China's Shanghai Composite is consolidating below resistance at 2250. Reversal below the lower channel border at 2180, however, would warn that the trend is slowing and breach of support at 2150 would signal another correction. Declining 21-day Twiggs Money Flow indicates short-term selling pressure, but oscillation above the zero line indicates buyers are dominant in the longer term.

Shanghai Composite Index

Hong Kong's Hang Seng is testing resistance at 23500 on the weekly chart. Breakout would be a strong bull signal, offering a target of 25500*. Follow-through above 24000 would confirm the advance. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. Reversal below 22750 is unlikely, but would indicate a correction to 21500.

Hang Seng Index

* Target calculation: 23500 + ( 23500 - 21500 ) = 25500

Rising Asian markets are bullish for the ASX. The ASX 200 index followed through above 5300, confirming an advance to 5850*. Expect retracement to test the new support level at 5250/5300. Failure of support is unlikely, but would warn of another correction.

ASX 200

* Target calculation: 5250 + ( 5250 - 4650 ) = 5850



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