Chart of the day Hang Seng reached inflection zone for potential bearish move

Short-term technical outlook on Hang Seng (Tues, 15 Aug 2017)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had pushed up higher from last Friday, 11 August low of 26832 after a 4% down move from the key predefined 27840/960 medium-term pivotal resistance as per highlighted in our weekly technical outlook report (click here for a recap).

The current pushed up in price action of the Index is in line with a positive closing seen in the major benchmark U.S. stock indices but from a technical analysis perspective, the Hong Kong 50 Index is still at risk to shape another leg of short-term corrective down move within a longer-term bullish trend. Short-term key technical elements as follow;

Key elements

• The current push up has now reached close to 61.8% Fibonacci retracement of the recent decline from 08 August 2017 high to last Fri, 11 August 2017 low which also confluences with the former minor swing low areas of 03 August/04 August 2017 and the minor descending trendline in place since 08 August 2017 high.
• The hourly Stochastic oscillator has flashed a bearish divergence signal at its overbought region which indicates that the recent short-term upside momentum of price action has started to abate.
• The next significant short-term support rests at 26600 which is defined by the former minor swing high area of 14 July 2017 and the 50% Fibonacci retracement of the recent minor up move cycle from 07 July 2017 low to 08 August 2017 high.

Key Levels (1 to 3 days)

Pivot (key resistance): 27500

Supports: 27030 & 26600

Next resistance: 27960 (medium-term pivot)

Conclusion

Therefore, as long as the 27500 short-term pivotal resistance is not surpassed, the Index is likely to shape another potential corrective downleg to retest the 27030 intermediate support before targeting the next support at 26600.

On the other hand, a clearance above 27500 should negate the preferred bearish tone for a further squeeze up towards the 27960 medium-term pivotal resistance.

Chart is  from City Index Advantage TraderPro

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