hang seng daily outlook tues 12 apr 2016 potential final push up towards 20730830 1805672016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has continued traded sideways after last Friday’s push up from 20189 low (+2%).

In our latest weekly strategy/outlook published yesterday, we highlighted that the Hong Kong 50 Index may see a risk of a minor push up towards its trendline resistance first. Please click here for more details.

Key elements

• The trendline resistance (highlighted in pink) that has linked up the lower highs since the 23 October 2015 high of 23530 is now capping the Index at 20830/20730 (see 4 hour chart).
• The trendline resisantance of 20830/20730 also confluences with a Fibonacci cluster.
• In the short-term, the Index has started to evolve within an ascending channel with the upper boundary (resistance) also pointing towards 20830 level. The lower boundary (support) stands at 20400.
• The hourly (short-term) Stochastic oscillator has just exited from its oversold region and still has ample room for further upside before reaching the extreme overbought level. These observations suggest a built-up in short-term upside momentum.

Key levels (1 to 3 days)

Pivot (key support): 20400

Resistances: 20730/830

Next support: 20070/19990

Conclusion

Short-term technical elements remain bullish. As long as the 20400 daily short-term pivotal support holds, the Index is likely to shape the potential final push up of the minor rebound towards 20730/830 resistance zone before another potential downleg occurs.

However, failure to hold above the 20400 short-term pivotal support may invalidate the final push up scenario to see a slide to retest last Friday, 08 April 2016 swing low area at 20070/19990.

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