
(Click to enlarge charts)
What happened earlier/yesterday
The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has staged the expected pull-back in line with the overnight weakness seen in the major U.S. stock indices but the decline seen in the Hong Kong 50 Index is still being held by the predefined short-term pivotal support of 21240.
Please click on this link for a recap on our previous daily short-term outlook/strategy.
Key elements
- The Index continues to evolve within a short-term bullish ascending channel in place since 08 April 2016 low. This morning’s slide in price action has managed to stall at the lower boundary of the ascending channel.
- The intermediate significant short-term resistance now stands at 21970 which is defined by the pull-back resistance of the former ascending channel bearish breakout that has capped the advance in price action on 14 April 2016 (the pink shaded box as highlighted on the 4 hour chart) and the 0.618 Fibonacci projection of the short-term up move from 08 April 2016 low @9am to 14 April 2016 high @9am projected from 18 April 2016 minor low of 21012.
- The next resistance remains at the 22200/300 zone which is defined by the upper boundary of the short-term ascending channel and confluences with a Fibonacci projection cluster and the graphical swing high area of 24 December 2015 high.
- The hourly (short-term) Stochastic oscillator has started to inch upwards just above the oversold region which suggests that short-term upside momentum of price action has resurfaced.
Key levels (1 to 3 days)
Pivot (key support): 21240
Resistances: 21970 & 22200/300
Next support: 20600
Conclusion
As long as the 21240 short-term pivotal support holds, the Index is still likely to see a potential push up to target the 21970 resistance with a maximum set at 22200/300 resistance zone.
However, a break below the 21240 short-term pivotal support may negate the bullish tone for a slide towards the next support at 20600.
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