hang seng daily outlook fri 01 apr 2016 bearish tone remains intact below 20730 resistance 180415201

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What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has shaped the expected breakdown below the minor support of 20670 as it continued to decline below the pull-back resistance of the ascending channel bearish breakout.

Please click on this link for a recap on our previous short-term daily outlook/strategy.

Key elements

• The hourly (short-term) RSI oscillator remains bearish as it has now broken below the 50% level and still has room for further downside before reaching its extreme oversold level. This observation suggests that downside momentum of price action remains intact.
• The current price action is now reintegrated back below the trendline resistance (highlighted in pink on the 4 hour chart) that has linked the lower highs since 23 October 2015 high of 23533. This observation suggests that it is likely a bull trap seen in the price action on 30 March 2016 where global equities experienced a “rosy up move” due to Fed chairwoman, Yellen’s dovish speech on future policy interest rate hikes.
• The short-term support remains at the 20390/270 zone which is defined by the gap up seen on 30 March 2016 and the minor swing low area of 29 March 2016 @9pm.
• The short-term pivotal resistance is now tightened to 20730 which is defined by the former minor swing low seen yesterday during European/early U.S. sessions.

Key levels (1 to 3 days)

Pivot (key resistance): 20730

Supports: 20390/270

Next resistance:  21000 (weekly/medium-term pivot)

Conclusion

Technical elements remain bearish. We have tightened the short-term daily pivotal resistance to 20730 for a further potential push down to target the 20390/270 support in the first step.

On the flipside, a clearance above the 20730 short-term pivotal resistance is likely to damage the expected direct decline for a push up back to retest the 21000 weekly/medium-term pivotal resistance.

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