(Click to enlarge charts)
What happened yesterday
The Hong Kong 50 Index (proxy for the Hang Seng Index) has shaped the expected pull-back after the bullish breakout seen last Friday, 29 January 2016.
- The current pull-back has managed to stall at the 19300 minor support of the former swing highs dated from 27 January 2016@9am and 28 January 2016 @5pm which also confluences with the trendline support from 21 January 2016 low.
- In conjunction with the trendline support seen on the Index’s price action, the hourly RSI oscillator has also managed to hold and staged a rebound from its trendline support. This observation suggests that upside momentum remains intact.
- The significant resistance stands at 20230/380 which is close to the 50% Fibonacci retracement of the steep down move from 24 December 2015 low to 21 January 2016 low and our current expected medium-term upside target (click here for more details as per highlighted in our latest weekly outlook/strategy).
Key levels (1 to 3 days)
Pivot (key support): 19300
Next support: 19000 (medium-term pivot)
As long as the 19300 short-term pivotal support holds, the Index is now likely to see another round of potential upside movement to target 20230/380
On the other hand, failure to hold above the 19300 pivotal support is likely to negate the bullish tone for a further slide to retest the pull-back support of the former trendline resistance from 08 January 2016 high at 19000 (also our medium-term pivotal support).
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