hang seng daily outlook 05 jan 2016 further potential corrective rebound above 21020 1791602016

(Click to enlarge chart) Key elements The Hong Kong 40 Index (proxy for the Hang Seng Index) has managed to stage a “gap up” in […]

(Click to enlarge chart)

Key elements

The Hong Kong 40 Index (proxy for the Hang Seng Index) has managed to stage a “gap up” in today’s opening session from 14 December 2015 swing low area at 21020.
The intermediate resistance to watch now is at 21600 which is defined by the former support that linked the lows of 18 December to 21 December 2015 and the 50% Fibonacci retracement of yesterday’s steep decline from 30 December 2015 high @9a.m to 04 Jan 2016 low @11pm.
The hourly (short-term) Stochastic oscillator has exited from its oversold region and still has some “room” left before reaching its extreme overbought level. This observation suggests that upside momentum remains intact.

Key levels (1 to 3 days)

Pivot (key support): 21020

Resistance: 21600 & 21820

Next support: 20700

Conclusion

As long as the daily (short-term) daily pivotal support at 21020 holds, the Index is likely to see a further corrective rebound to test the 21600 resistance with a maximum limit set at 21820.

However, failure to hold above the 21020 pivotal support may see a further breakdown towards the next support at 20700.

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