hang seng daily outlook fri 05 feb 2016 19300400 remains the resistance to watch 1796162016

(Click to enlarge charts)

What happened earlier

The Hong Kong 50 Index (proxy for the Hang Seng Index) has tested the 19300 short-term pivotal resistance but failed to have a “clean” break above it.

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

Key elements

• Despite yesterday pushed up in price action, the Index has remained capped by a short-term trendline resistance that has linked the lower highs since 29 January 2016 high now at 19400.
• The hourly (short-term) Stochastic oscillator has started to inch down from its overbought region which suggests a potential downside reversal in price action.
• The short-term significant support rests at 18730/540 which is defined by the swing low area of 21 January 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 19300/400 (excess)

Support: 18730/540

Next resistances: 19750 & 20230/380

Conclusion

As long as the 19300/400 short-term pivotal resistance is not surpassed, we are still keeping our short-term bearish bias for a decline to retest the 18730/540 support zone.

On the flipside, a break above 19400 is likely to negate the bearish tone for a push up towards the 19750 range top formed by the minor swing highs of 19 January 2016 and 29 January 2016. Only a clearance above 19750 is likely to open up scope for more upside movement towards the next resistance at 20230/380.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.