hang seng daily outlook friday 18 mar 2016 watch the excess at 21000 1802482016

(Click to enlarge charts)

What happened yesterday/earlier

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has blasted past above the upper limit of the risk zone at 20520 and invalidated our preferred direct drop scenario.

Please click on this link for a recap our previous short-term daily outlook/strategy published on Thurs, 17 March 2016.

Key elements

• The current strong move seen in the Hong Kong 50 Index is also driven by the direct intermarket correlation with the China stock market as the ChinaA50 index has continued to inch higher (up by 0.85% from yesterday’s close of 9582).
• Despite the break above the risk zone of 20380/520 risk zone for the Hong Kong 50 Index, we are not convince of a further potential strong upmove as it is still below the excess level of 21000 and the China A50 is also coming close to its significant medium-term resistance at 9840 (expected upside target for this week). Click over here for more details as per highlighted in our latest weekly outlook/strategy).
• The daily (medium-term) RSI oscillator is still below its significant resistance that has capped previous advances in the past (see the shaded pink ovals).

Key levels (1 to 3 days)

Resistance: 21000 & 22300

Support: 20200 & 19800

Conclusion

Even though, the Index has broken above 20380/520 risk zone but current technical elements are not justifying any potential strong upmove at this juncture as it still remains below the “excess” 21000 level with China A50 also coming close to its key medium-term resistance at 9840.

Therefore, we are adopting a neutral stance for now on the Hong Kong 50 Index between 21000 & 20200 in the short-term.

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