hang seng daily outlook tues 14 june 2016 impending potential bearish breakout below 20740820 resist

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What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index future) has traded sideways in today’s (14 June) morning session after yesterday gapped down of 0.8%.

Key elements

• Current short-term price actions resemble an impending bearish continuation “Pennant” pattern which suggests that the Index is likely to resume its prior down move in place since last Friday, 10 June 2016 after this minor consolidation ends.
• The upper limit of the “Pennant” stands at 20570.
• The key short-term pivotal resistance will be at 20740/820 which is defined by a confluence of elements (the gap resistance, pull-back resistance of the former short-term ascending channel’s support and the 38.25 Fibonacci retracement of the recent decline from 08 June 2016 high of 21407 to the current intraday low).
• The next near-term support rests at 20100 which is defined by the former minor swing high areas of 12 May and 17 May 2016.

Key levels (1 to 3 days)

Intermediate resistance: 20570

Pivot (key resistance): 20740/820

Support: 20100

Next resistance: 21100

Conclusion

The Index may see a push up first towards the upper limit of the “Pennant” at 20570 and as long as the 20740/820 daily short-term pivotal resistance is not surpassed, thereafter it is likely to shape another potential downside movement to target the next support at 20100.

On the other hand, a break above the 20740/820 short-term pivotal resistance is likely to invalidate the bearish scenario to see a squeeze up towards the next resistance at 21100.

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