hang seng daily outlook fri 19 feb 2016 19410 needs to be surpassed to revive bulls 1797962016

(Click to enlarge chart)

What happened yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has tried to stage a rally in the European session but failed to break above the 19410 intermediate resistance.

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

Key elements

• In this morning session, the Index has staged a gapped down opening from the 19410 intermediate resistance and broke below the lower boundary (support) of the short-term bullish ascending channel in place since 11 February 2016 low.
• The next significant resistance after 19410 remains at 19720 which is our medium-term upside target for this week and now corresponds closely with the standard 5^th wave targets derived from the 0.618/0.764  Fibonacci projection of the rally from 11 February 2016 low of 18056 to 16 February 2016 high of 19275 @1pm projected from 17 February low of 18898 @3pm.
• The significant near term support remains at 19100 which is defined by the lower boundary of the short-term bullish ascending channel from 11 February 2016 low and the 23.6% Fibonacci retracement of the current up movement from 11 February 2016 low to current high of 19453.

Key levels (1 to 3 days)

Supports: 19100 & 18900

Resistances: 19410 & 19720

Conclusion

Mixed elements at this juncture, therefore we turn neutral for now. Only a clear break above 19410 is likely to revive the bullish tone to see a potential rally towards the next resistance at 19720 (medium-term upside target).

On the other hand, a break below 19100 may see a further slide to test the next support at 18900 (the minor swing low of 17 February 2016).

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