Major Bullish Break in KOSPI; ASX 200 Index’s Rally is Running into a Tough Barrier

ASX, ASX 200 INDEX, KOSPI, KOSPI COMPOSITE INDEX – TECHNICAL OUTLOOK:

• Major bullish pattern triggered in KOSPI.
• ASX 200 index is running into stiff resistance.
• What are the key levels to watch?

KOSPI COMPOSITE INDEX TECHNICAL OUTLOOK – BULLISH

KOSPI’s break higher this week indicates that South Korean equities could finally be catching up with some of its regional peers.

The South Korean benchmark index has risen above the marginally downward-sloping trendline from August triggering a major reverse head & shoulders pattern (the left shoulder is the mid-2022 low, the head is the September low, and the right shoulder is the early-January low), paving the way toward 2870. Interim resistance is at the end-May 2022 high of 2685.

KOSPI Daily Chart

Chart Created by Manish Jaradi using TradingView

The bullish break has also coincided with a move above another key resistance, setting the stage for a higher-top-higher-bottom sequence (that is, an uptrend). Furthermore, the rise above the 200-day moving average for the first time since late 2021 is a sign that the multi-month downward pressure was fading.

KOSPI Daily Chart

Chart Created by Manish Jaradi Using TradingView

On the downside, the index needs to hold above the March low of 2350, around the 200-day moving average for the nascent uptrend to remain intact.

ASX 200 TECHNICAL OUTLOOK – NEUTRAL

Australia ASX 200 index’s three-week-long rally looks set to pause as it runs into a stiff roadblock.

The index has staged a ‘V’-shaped rebound but is now testing the upper edge of the Ichimoku channel on the daily chart, roughly coinciding with the early-March high of 7370. The index needs to clear the 7325-7370 resistance area for the February-March downtrend to reverse.

ASX 200 INDEX Daily Chart

Chart Created by Manish Jaradi using TradingView

Earlier last month, the index held above a strong support area: the 200-day moving average, coinciding with the early-January low of 6905, keeping the higher-top-higher-bottom sequence intact. Beyond the short term, the ASX 200 index continues to be in a broad range of 6400-7600 (see the weekly chart).

ASX 200 INDEX Weekly Chart

Chart Created by Manish Jaradi Using TradingView

On the downside, the index has immediate support at Thursday’s low of 7200. Any break below could indicate that the three-week-long upward pressure had faded.

— Written by Manish Jaradi, Strategist for DailyFX.com

— Contact and follow Jaradi on Twitter: @JaradiManish