hang seng daily outlook fri 22 apr 2016 potential short term bullish tone remains intact above 21240

(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.

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.