The KOSPI continues to lead market development in Asia, excluding China and Japan. China has similar breakout behavior, but it is from a downtrend. Japan remains in a tight trading range, again in a downtrend. It is Korea that is breaking out after an uptrend retreat.
The same pattern of breakout is seen in the Straits Times Index , the KLCI and the Hang Seng. The Korean breakout started a little earlier and is more powerfully developed.
The KOSPI is defined by an upward sloping triangle. This is a powerful and reliable chart pattern that signal up trend breakouts. The pattern is also used to help set the upside targets.
The up sloping triangle pattern in the KOSPI is not a perfect pattern. This means that we apply the upside targets with a higher degree of caution. The probability of success is reduced. The upside target is calculated by measuring the base of the triangle.
We have used the widest point in the pattern. The upside projection has a target near 2,150. This is a tentative target because there is a strong historical resistance level near 2,100.
This suggests the KOSPI breakout can move quickly to 2,100 and then begin to lose momentum as it moves towards the upper target near 2,150. KOSPI traders will tighten stops as the index moves near to 2,100.Page 1 of 2 | Next Page