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The Hang Seng Stock Index is a free float, adjusted market capitalization, weighted stock Market Index in Hong Kong. The Index records and monitors daily changes of the largest companies of the Hong Kong Stock Market. It is the main indicator of the overall market performance in Hong Kong. These 50 constituent companies represent about 58% of the capitalization of the Hong Kong Stock Exchange. At Elliottwave-Forecast, we have been tracking the Index sequences together with the FTSE 100 (The Financial Times Stock Exchange 100 Index). FTSE 100 is the share Index of the 100 companies listed on the London Stock exchange with higher market capitalisation.

The Hang Seng Index and FTSE 100 both are showing the same sequences since the all-time lows and both are showing an incomplete sequence since the lows at 2008-2009 range. Today, the Market today can advance in 2 types of sequences. The first type is 5-9-13 or motive sequence and the second type is 3-7-11 or corrective sequence. Both the Hang Seng Index and the FTSE 100 advance in a corrective sequence and both have not reached the 100% from all-time low.

The Market by nature will always runs in one of the 2 sequences above. Both Hang Seng and FTSE 100 are showing the same outcome which is an extension to the upside within the cycle since 2008-2009 low. The charts below show the extension target in both indices, and the upside in both indices will drive the rest of the World Indices higher. This means that SPX 500 (The Standard & Poor's 500), which is the market capitalizations of the 500 large companies in the United States, has scope to rally into levels which not many people are expecting such as 3245 or even the 4000 levels.

The rally in SPX 500 from all-time low can become a 5 waves impulse if SPX 500 can break above 3245 before the Hang Seng and FTSE 100 reach the 100% from all time low and finish the blue sequence as charts below show. At the end of the day, the world indices are here to extend and contrary to many popular street opinion, they will remain a buy in the dips in all time frames until Hang Seng and FTSE 100 reach their target.

Hang Seng Stock Index Monthly and Weekly

The Hang Seng Index is showing 5 swings from 2008 lows, which should result in more upside within the blue sequence into the all time 100%. The invalidation for this view in daily degree is the blue 4 low (18278.80) while the invalidation in weekly degree is the black 4 low (10676.29).

FTSE 100 Stock Index

The Index took the 2000 peak, which suggests the bullish sequence from all-time lows is incomplete. In addition, we could also see 5 swing bullish sequence in blue degree from 2009 low, which favors more upside.

The following chart below shows that both Hang Seng and SPX 500 have the same trend

The EURUSD pair has extended its overnight trading gains during today's European session, hitting 1.1844, as the single currency stages a relief rally after the Catalan government opted to enter into further dialogue with the Spanish government.

Sentiment surrounding the EURUSD today is bullish while the pair continues to hold price-action above the key 1.1800 handle. The euro continues to drive higher, as financial markets remain complacent towards political risks in Spain.

The euro has pulled back from its weekly price-high, at 1.1844, and is currently holding price-action above the 1.1800 level, at 1.1820.

Technically, the EURUSD pair is now trading within a bullish inverse head and shoulder pattern on the lower time-frame price-charts, with an upward price projection of 180 pips.

Any technical corrections lower on the EURUSD pair should find support from the 1.1800 and 1.1795 level. Below the 1.1795 level, a deeper pullback towards support at 1.1770 and 1.1740 may take place.

To the upside, key technical resistance is found at the pairs 50-month moving average, at 1.1829 and the recent swing-high, at 1.1844. Once above 1.1844, further resistance is found at 1.1858, 1.1875 and 1.1910.

The USDJPY pair continues to trade at the lower end of its 111.98 to 113.43 trading range, as uncertainty over the Trump administrations U.S tax overhaul plan continues to weigh on the U.S dollar index.

Trading sentiment surrounding the USDJPY pair is slightly bearish, as price-action continues to slip lower, but seemingly unable to close under the 112 level on a higher time-frame basis.

Yesterday, the USDJPY broke underneath the 112.25 range-low, hitting 111.98, but later recovered towards the 112.58 level as sellers failed to close price-action below the 112 handle.

Today's FOMC Meeting Minutes is a key risk event for the USDJPY pair, with sellers looking to target below the 111.90 levels, and buyers looking to test demand above the 113 level.

Key intraday technical support below the 111.98 level is found at 111.90 and the pairs key 200-week moving average, at 111.69. Once below 111.69, further support is found at 111.41 and 110.85.

To the upside, key intraday technical resistance is found at 112.40 and the recent swing price-high, at 112.58. Above 112.58, further resistance is found at 112.90, 113.25 and 113.43.

Gold prices continue to head higher this week, as the metal has posted considerable gains on Wednesday. In the North American session, the spot price for an ounce of gold is $1289.65, up 0.24% on the day. There are no major US releases on the schedule. On Thursday, the US releases PPI and unemployment claims.

All eyes remain on Spain, after Catalan President Carles Puigdemont declared independence on Tuesday, but then qualified the move by suspending any formal secession moves. Puigdemont announced that he is open to dialogue with the Spanish government, but Madrid continues to take a hard line against the Catalan leader. On Wednesday the Spanish government demanded that Puigdemont clarify if he had indeed declared independence. Madrid is reportedly considering imposing Article 155 of Spain's constitution, which would allow the government to suspend the Catalan government and hold new elections. This "nuclear option" could mark a steep escalation in the constitutional crisis. Although Catalan leaders say they have a mandate for independence based on the referendum (in which 90% voted for independence), Catalans are deeply divided over the issue. Several banks and major companies have announced they will move their legal headquarters from Barcelona to Madrid, and the constitutional crisis could take a toll on the Spanish economy if the stalemate continues.

The markets are keeping a close eye on the Federal Reserve, which will release its minutes from the September meeting. At the meeting, the Fed did not raise interest rates but did announce it would begin trimming its $4.2 billion balance sheet in October. This is seen as a vote of confidence in the US economy, which continues to show strong growth. At time of the September meeting, the odds of December rate hike were pegged around 50 percent. However, the odds have now surged to 91 percent. The primary reason for the huge shift in market sentiment can be attributed to Fed policymakers coming out in support of a rate hike, notably Fed Chair Janet Yellen. The lack of inflation remains the most significant impediment to raising rates, but Yellen and other FOMC members have insisted that strong economic conditions will lead to higher inflation levels. Even if inflation does not move higher before 2018, the Fed now appears ready to raise rates for a third and final time this year.

Daily Pivots: (S1) 112.01; (P) 112.41; (R1) 112.85; More...

Intraday bias in USD/JPY remains on the downside for the moment. A short term top should be in place at 113.43, on bearish divergence condition in 4 hour MACD. Also, the pair is rejected by medium term channel resistance. Deeper fall would be seen to downside for 55 day EMA (now at 111.32) first. Sustained break there will bring retest of 107.31. For now, risk will stays on the downside as long as 113.43 resistance holds.

In the bigger picture, rise from 98.97 (2016 low) is seen as the second leg of the corrective pattern from 125.85 (2015 high). It's unclear whether this this second leg has completed at 118.65 or not. But medium term outlook will be mildly bearish as long as 114.49 resistance holds. And, there is prospect of breaking 98.97 ahead. Meanwhile, break of 114.49 will bring retest of 125.85 high. But even in that case, we don't expect a break there on first attempt.

Daily Pivots: (S1) 0.9724; (P) 0.9762; (R1) 0.9788; More....

Intraday bias in USD/CHF remains neutral for the moment. Considering bearish divergence condition in 4 hour MACD, break of 0.9704 resistance turned support will argue that rebound from 0.9420 has completed. This will also mixed up the near term outlook and turn bias back to the downside for 0.9587 support. Meanwhile, break of 0.9835 temporary top will extend the rebound to 61.8% retracement of 1.0342 to 0.9420 at 0.9990.

In the bigger picture, current development suggests that USD/CHF has defended 0.9443 (2016 low) key support level again. Rise from 0.9420 could develop into a medium term move and target a test on 1.0342 high. This represents the upper end of a long term range that started back in 2015. On the downside, break of 0.9587 support is now needed to indicate completion of the rise from 0.9420. Otherwise, further rally will remain in favor in medium term.

Daily Pivots: (S1) 1.3146; (P) 1.3186; (R1) 1.3241; More....

Intraday bias in GBP/USD remains neutral for consolidation above 1.3026 temporary low. At this point, deeper fall is mildly in favor as long as 1.3291 minor resistance holds. Below 1.3026 will target 1.2773 key support level. Decisive break there will affirm the bearish case of medium term reversal. Nonetheless, break of 1.3291 will suggest that the pull back from 1.3651 is completed and turn bias back to the upside.

In the bigger picture, while the medium term rebound from 1.1946 was strong, GBP/USD hit strong resistance from the long term falling trend line. Outlook is turned a bit mixed and we'll turn neutral first. On the downside, decisive break of 1.2773 key support will argue that rebound from 1.1946 has completed. The corrective structure of rise from 1.1946 to 1.3651 will in turn suggest that long term down trend is now completed. Break of 1.1946 low should then be seen. On the upside, break of 1.3835 support turned resistance will revive the case of trend reversal and target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 .

Daily Pivots: (S1) 1.1754; (P) 1.1790 (R1) 1.1843; More...

Break of 1.1832 resistance suggests that the corrective pull back from 1.2091 has completed at 1.1669 already, ahead of 1.1661 support, on bullish convergence condition in hour MACD. Intraday bias is turned back to the upside for further rise for retesting 1.2091 high. We'll be cautious on strong resistance from there to bring another fall to extend the consolidation. On the downside, below 1.1755 will turn bias back to the downside and could extend the correction from 1.2091 through 1.1669.

In the bigger picture, rise from medium term bottom at 1.0339 is not finished yet. It's expected to continue after pull back from 1.2091 completes. And, next target will be 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall from 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside.

Dollar stays generally weak today as markets await September FOMC minutes. The key takeaway of that FOMC meeting was that policymakers stick to the plan to raise interest rate one more time this year. And they projected to hike three more times next year. Markets pricing for December hike jumped sharply since then. Fed fund futures are implying 93.1% odds for that. Core inflation projection for 2017 and 2018 were revised slightly lower. But core inflation forecasts for 2019 and 2020 were kept unchanged. The accompanying statement and economic projections suggested that Fed was not too concerned with recent slowdown in core inflation. And that was being reflected in the overall tone of comments of Fed officials so far. Markets will look into more details on how comfortable the policy makers are on inflation outlook. But overall, we're not expecting anything revealing from the minutes.

With no key economic data to be featured from US, focus will stay on news regarding US President Donald Trump's tax plan. It's clear that Republicans only get 52-seat majority in the Senate. Trump's feud with lawmakers of his own party is making the case even more shaky. On the one hand, he is openly in verbal exchanges with Senator Bob Corker. There are also ideological demands from Senator Rand Paul and procedural demands from Senator John McCain. It's reported that Trump could also face difficulty to get the votes from Susan Collins and Lisa Murkoski. The major concern is that based on the way Trump handles the difference between him and Republicans, the split between the White House and Republicans is more likely to widen than narrow.

North Korea is seen as another key risks for Dollar. Late yesterday, the US military flew two Air Forex B-1B Lancer bombers over the Korean Peninsula. It's seen as a show off of the military force at time of mutual provocations. An editorial in China's People's Daily warned that "war on the Korean Peninsula would be catastrophic, and dialogue remains the best option." And the paper criticized that Trump's threats seem to be part of a larger strategy, coherent or not, to instill fear in Pyongyang, so that it will agree to U.S. demands to abandon all nuclear weapons and existing nuclear programs." However, such strategy "could backfire bigly."

Spanish PM Rajoy cornering Catalan separationists

In Spain, Prime Minister Mariano Rajoy responded to Catalan leader Carles Puigdemont but pushing him to the corner. Puigdemont proclaimed independence in his address to the regional parliament yesterday. But at the same time, he suspended form declaration immediately to allow for talks with the Spanish government. Rajoy said today that "the cabinet has agreed this morning to formally request the Catalan government to confirm whether it has declared the independence of Catalonia, regardless of the deliberate confusion created over its implementation." And Rajoy warned that "the answer from the Catalan president will determine future events, in the next few days."

IMF Raised Global growth forecast

IMF projected global economy to growth 3.6% in 2017 and 3.7% in 2018, up from April projection of 3.5% and 3.6% respectively. But IMF chief economist Maurice Obstfeld warned that "a closer look suggests that the global recovery may not be sustainable -- not all countries are participating, inflation often remains below target with weak wage growth, and the medium-term outlook still disappoints in many parts of the world."

Meanwhile, IMF lowered US growth forecast to 2.2% in 2017 and 2.3% in 2017, down from April's projection of 2.3% and 2.5% respectively. IMF noted that "the downward revision relative to April forecasts reflects a major correction in U.S. fiscal policy assumptions." And it noted that due to "significant policy uncertainty", the passing of tax reform shouldn't be counted on.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1754; (P) 1.1790 (R1) 1.1843; More...

Break of 1.1832 resistance suggests that the corrective pull back from 1.2091 has completed at 1.1669 already, ahead of 1.1661 support, on bullish convergence condition in hour MACD. Intraday bias is turned back to the upside for further rise for retesting 1.2091 high. We'll be cautious on strong resistance from there to bring another fall to extend the consolidation. On the downside, below 1.1755 will turn bias back to the downside and could extend the correction from 1.2091 through 1.1669.

In the bigger picture, rise from medium term bottom at 1.0339 is not finished yet. It's expected to continue after pull back from 1.2091 completes. And, next target will be 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall from 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside.

Economic Indicators Update

The British pound is showing little movement in the Wednesday session. In North American trade, GBP/USD is trading at 1.3187, down 0.11% on the day. On the release front, today's highlight is the Federal Reserve minutes from the September policy meeting. Today's highlight is the Federal Reserve minutes from the September policy meeting. As well, JOLTS Job Openings is expected to ease slightly to 6.13 million.

Despite pessimistic forecasts from the Bank of England and some analysts, the British economy has weathered the Brexit storm and remains in good shape. However, the Brexit talks have been difficult, and the British and European negotiators remain far apart on a range of key issues, such as the amount that Britain will pay to the EU when it leaves the club. The British government continues to put on a brave face and insists that the talks have made progress, but European negotiators have sounded less enthusiastic. If significant progress is not made by the end of the year, there will be further pressure on Prime Minister May to take Britain out of the EU without a deal. Senior British ministers are divided in their approach to Brexit, which will only make it more difficult for negotiators to hammer out a deal.

The markets are keeping a close eye on the Federal Reserve, which will release its minutes from the September meeting. At the meeting, the Fed did not raise interest rates but did announce it would begin trimming its $4.2 billion balance sheet in October. This is seen as a vote of confidence in the US economy, which continues to show strong growth. At time of the September meeting, the odds of December rate hike were pegged around 50 percent. However, the odds have now surged to 91 percent. The primary reason for the huge shift in market sentiment can be attributed to Fed policymakers coming out in support of a rate hike, notably Fed Chair Janet Yellen. The lack of inflation remains the most significant impediment to raising rates, but Yellen and other FOMC members have insisted that strong economic conditions will lead to higher inflation levels. Even if inflation does not move higher before 2018, the Fed now appears ready to raise rates for a third and final time this year.