hang seng daily outlook thurs 19 may 2016 19725 short term pivotal support challenged turn bearish 1

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index future is now challenging our predefined short-term pivotal support at 19725 and our initial minor rebound view is now at risk.

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

Key elements

• Based on intermarket analysis, the minor rebound seen yesterday in the S&P 500 and the DAX is almost coming to its end or has ended. In addition, the China A50 has broken below and retested the ascending range/bearish flag consolidation configuration’s former lower boundary (support) which indicates a potential continuation of the medium-term downside movement in place since 03 May 2016 (click here to recap on  current weekly outlook/strategy & refer to the 2^nd chart).
• On the Hong Kong 50 Index, the minor ascending trendline from 13 May 2016 low has been broken and current price action has retested and failed to make any advance.
• The significant short-term resistance now stands at 19910 which is the minor swing high of 18 May 2016 and the gap seen on the 18 May 2016.
• The short-term supports rests at 19500 follow by 19050 (minor swing low area of 29 February 2016 + 0.764 Fibonacci projection of the distance of down move from 21 April 2016 high of 21648 to 06 May 2016 low of 19993 projected from 11 May 2016 high @9am).

Key levels (1 to 3 days)

Pivot (key resistance): 19910

Supports: 19500 & 19050

Next resistance: 20360

Conclusion

Turn bearish and as long as the daily short-term pivotal resistance at 19910 is not surpassed, the Index is likely to see a further potential decline to target 19500 before 19050.

On the other hand, a break above the 19910 short-term pivotal resistance is likely to invalidate the direct drop scenario for a minor rebound to test the next resistance at 20360 (the minor swing high areas of 09/11 May 2016 and the 38.2% Fibonacci retracement of the recent decline from 21 April 2016 high to last Friday, 13 May 2016 low of 19579)

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