Spot USDJPY, Nikkei, Topix, FTSE China A50, Hang Seng CE Index, Hang Seng, Kospi, Gasoil ICE, Natural Gas

Forecast for 4th February 2013

Spot USDJPY

The USDJPY experienced a 13 year bear market from 1998 to 2011 which saw prices bottom at 75.35. The first Fibonacci target for the bounce of the 13 year bear market is at 92.42 and we reached this target on Friday. The market is very overbought on weekly and daily charts and this really should have acted as strong resistance so it is a surprise that we shot through this level like it was not there. The unstoppable 4 month rally closed above 92.42 on Friday which now signals a move to the next target of 93.99 this week.

If we drift lower look for 92.42/34 as first support but below here 91.96 could provide a floor today. However a break below here keeps the market under pressure for 91.52/34 which should be a good buying opportunity today.

Nikkei March contract

Nikkei reached our target of 11219 for profit taking as we over ran slightly to 11250 and there is a high chance of a top for the 6 month rally here.

However a sharp collapse in not expected, rather a drift back to Friday’s low of 11054 initially but below here look for 10940/930. This should hold on the first test so look for a low and a bounce back may be to 11000. If we do break lower however next target is 10835 and then excellent support at 10749/737. This should provide a floor for the correction at this stage so worth buying in to longs here this week .

11219/11250 is our resistance band which should be very tough to beat so we watch for a high here again today. Ideally, this being such a big level we need to use a stop above the 2010 high of 11390.

Topix March contract

Topix has at last reached our monthly Fibonacci resistance at 948/955. With the market severely overbought it may be wise to take profit on longs here and see if we pull back in the early part of February for another buying opportunity. However if we do push higher through 956, the next target is 966 and then 2011 highs of 976 which should cause a few problems for bulls.

Initial target for profit taking is 929 but there is scope for 918/916 which should hold a slide today. However longs need a stop below 912 for 906, possibly 896/94 with a floor expected here this week if tested.

FTSE China A50 Feb contract

FTSE China A50 roared higher though the 9165/70 upper target and closed above the 200 week moving average at 9178 having reached 9245. Next target for the unstoppable market is 9285 then 9350/73 where we should run in to sellers.

Buying in to weakness looks like the safest strategy. Support today at 9025 then 8889 with 8780 below.

Hang Seng CE Index March contract

Hang Seng China Enterprises Future in a holding pattern most of last week as the market runs out of momentum. We are so over bought and in need of a correction but 12011/11978 acted as support again on Friday and being 21 day moving average this is an important level, so a break this week would be significant and lead to 11853 on the way to 11778/753 support.

Last week’s high at 12230/266 is our major resistance, which should hold the top side again this week. Worth exiting any longs on the approach therefore and trying shorts with a stop above 12300. If we do push through here in today’s session we look for 12335 as the next target and then 12474. Above here 12546 closes another gap from Aug 2011.

Hang Seng March contract

Hang Seng Futures headed lower as we warned but just held on to 23575 support as we bottomed at 23568. 23600/575 is the level to watch today as a break could target the 21 day MA and further S/T Fib support at 23497/484 where we look a low today but failure here takes us towards 23392/364.

Resistance at 23770/816 then the week’s high at 23943 and this could cap any rally again today so we need to exit any longs here. If we do push higher though look for 24161 then 24284. Above here we tackle the 2011 highs of 24462/24485 and being a yearly high this should be very significant resistance.

Kospi March contract

Kospi Future held Tuesday’s range for the rest of the week finding it hard to fight the downtrend and holding resistance at 259.30/260. Last week’s low at 254.80/60 is good daily Fibonacci support with the 200 day moving average just below at 254.11 so should be hard to break despite the trend, with the market oversold. However we can stop on longs and reverse in to shorts below 254.00 for 252.75. A break below here targets the 6 month up trend line at 250 where we would hope to see a low.

Resistance at 259.30/260 should remain a struggle once again but if a break higher is seen we look for 261.95/262.08 which may be enough of a recovery. Should be worth exiting longs here and trying shorts with a stop above 264.50 for 266.50/57. This resistance should hold any recovery this week.

Gasoil ICE Feb contract

Gasoil was expected to hit our next target of 1001.50/1008 on Friday and with tough resistance in an overbought market we predicted a top here for the time being. This target was hit and high of the day was in fact 1008.50.

Although this was a strong performance and we expect to continue the uptrend we may see a drift lower initially to 998.50. Watch for a low for the day here but if we continue lower there is good support at 992 so little chance of any further losses.

1008 remains tricky resistance but we have the momentum to push through here eventually to the next target of 1014/16. Watch for profit taking here and the chance of a small pullback but if we break higher we should then close a gap at 1021.

Natural Gas March contract

Nat Gas saw resistance at 3.374/386 cap the market again and we held above 3.258/240 support. The outlook is quite weak so we may see this level tested today and we watch for a break lower to target last week’s low at 3.215/207. Below here we hit strong support from the 5 month trend line at 3.185 which should see us bounce but a break could keep the pressure on for 3.122 then 3.087.

3.374/386 remains resistance today and should be hard to beat with the market likely to remain under pressure, but if we break last week’s high at 3.396 we should close the gap towards 3.426 and top out here. Wee exit any longs and try shorts with a stop above 3.445.