Chart of the day Hang Seng pull backed towards short term ascending channel support

Short-term technical outlook on Hang Seng (Tues, 31 Aug 2017)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had continued its relentless rally from its recent medium-term swing low area of 11 August/18 August 2017 and closed slightly above the 28000 key psychological level of 28000 at 28028 on Wednesday, 30 August.

The Index has not seen in the 28000 level since May 2015 and in today’s morning Asian session, the Index had retraced some of its gains and pull-backed by close to 1% from yesterday’s intraday high of 28157. Short-term key technical elements as follow;

Key elements

• This morning’s pull-back in price action of the Index has reached a significant short-term support of 27790 which is defined by a short-term bullish ascending channel in place since the 18 August 2017 minor swing low and close to the 23.6% Fibonacci retracement of the recent rally from 18 August 2017 low to yesterday’s high of 28157.
• The hourly Stochastic oscillator has reached and started to inch up from its extreme oversold level. This observation indicates the revival of short-term upside momentum of price action.
• The next significant short-term resistance stands at 20300 which is defined by the 1.618 Fibonacci projection of the up move from 11 August 2017 low to 16 August 2017 high projected from 18 Aug 2017 minor swing low of 26977.

Key Levels (1 to 3 days)

Pivot (key support): 27790

Resistance: 28300

Next support: 27600/455

Conclusion

The short-term uptrend of the Index remains intact. As long as the 27790 pivotal support holds, the Index may see a further up move to target the next resistance at 28300 in the first step.

However, failure to hold above 27790 may negate the bullish tone to see a deeper pull-back towards the next support at 27600/455 (the lower boundary of the medium-term ascending channel from 05 Jul 2017 low & the former minor swing high area of 17 Aug 2017)

Chart is from City Index Advantage TraderPro

Disclaimer

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs. While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments. City Index recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com.au, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. GAIN Capital Australia Pty Ltd (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.