DOW JONES INDEX OUTLOOK:
The Dow Jones Industrial Average (Dow) futures are climbing at early Asia hours, after rising 0.41% on Friday. Traders may ride the normal ebb and flow with a relatively quiet macro calendar today. This Wednesday’s FOMC meeting and Thursday’s BOJ and BoEinterest rate decisions are among the top events this week and thus will also be closely watched out.

Japan’s Liberal Democratic Party’s (LDP) election, which decides who will replace Prime Minister Shinzo Abe after his resignation, is held in Tokyo today. The chief cabinet secretary Yoshihide Suga, a candidate perceived as popular, is likely to keep Abe’s policy largely unchanged if elected. Any unexpected outcome, however, is likely to dampen risk appetite and spook the Japanese Yen.

The VIX volatility index has fallen for a fifth consecutive session to 30.99, suggesting that the recent technical pullback might be another healthy correction amid a mid-term bull run.

Technically,the Dow has rebounded at the lower bound of its Bollinger Band (chart below). An immediate support level can be found at 27,500 – the 50-Day Simple Moving Average (SMA). Breaking this level will likely open the room for further downside towards the 23.6% Fibonacci retracement level at 26,600. An immediate resistance level can be found at 28,170 – the 20-Day SMA.

HANG SENG INDEX OUTLOOK:
Hong Kong’s Hang Seng Index (HSI) may open mildly higher alongside the broader Asia-Pacific markets as volatility index (VIX) continues to drift lower.

Technically, the HSI has broken down the upward trend as indicated in the chart below. It has since entered a bearish trend and has tested a key support level at 24,100 – the 38.2% Fibonacci retracement. The MACD indicator remains in a bearish setup and trends lower, suggesting more consolidation ahead before market reaches a real bottom.

Reference by: Margaret Yang, Strategist for DailyFX.com