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India Nifty 50, Korea KOSPI Technical Outlook: More Downside Coming?

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India Nifty 50, Korea KOSPI Technical Outlook: More Downside Coming?


South Korea’s KOSPI at risk of further weakness; India’s Nifty stock index’s three-month uptrend may pause; what’s the outlook for Korea and India stock indexes? What technological levels are worth paying attention to in the future?

Korea KOSPI Technical Outlook: Bearish

South Korea’s stock index retreated from near strong resistance on the daily line before breaking below key support, suggesting further weakness in the South Korean KOSPI composite index.

South Korea’s stock index retreated from key resistance at the 89-day moving average (DMA) in mid-August, the third time in nine months that it has been capped at that level. In addition, the break below the horizontal trendline support line at 2432 in early September indicates that the downtrend of the stock index has resumed. The South Korean stock index saw similar pullbacks from the 89-day SMA in January and June, followed by a bearish breakout, with bears gaining momentum to dominate the market (see downtrend strength in the chart below).

It fell about 11% in the next two sessions. While history may not repeat itself, we at least see a growing risk of South Korea’s KOSPI retesting the July low of 2277 (it will hit around 2165 after falling 11% from 2432). From a positive perspective, the South Korean stock index needs to break above the August high of 2546 (a level roughly close to the 89-day SMA) to be sufficient to relieve downward pressure.

Daily Chart of Korea KOSPI Composite Index

India NIFTY 50 Technical Outlook: Neutral

The weekly chart of India’s NIFTY 50 index recorded a bearish engulfing candle pattern near key resistance, suggesting that the three-month uptrend may be fading. Indian stock indexes are likely to stabilize in a range-bound range in the near term.

The NIFTY 50 hit a five-month high two weeks ago, but struggled to sustain gains in the second half of last week. In the process, the index formed a bearish reversal pattern on the weekly chart. Indian shares retreated from strong resistance from the April horizontal trendline at 18100. This is similar in effect to a bearish reversal pattern near the resistance level a month ago when a bearish evening star formed. There was a bearish reversal just above the aforementioned level, suggesting that the bulls had to hold back for the time being.

On the daily chart, the two-week-old high is coinciding with a bearish divergence, where price upside coincides with a drop in momentum. The Indian stock index is currently testing the rising channel since March, with the uptrend line in focus as key support. A break below the trendline would mean the Indian stock index has turned bearish within an ascending channel. At that time, investors will shift their focus to the key support near the 17166 line at the end of August (this level is also the neckline of the double top pattern). Only a break below the 17166 line would mean that the multi-week uptrend is at risk. (Translated by Ashley by Manish Jaradi)

Daily Chart of India’s NIFTY 50 Index

India Nifty 50, Korea KOSPI Technical Outlook: More Downside Coming?

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