hang seng daily outlook tues 29 mar 2016 potential further decline below 20510 resistance 1803502016

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What happened earlier

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has opened with a gapped up (+1.2%) in today’s morning session after its Easter holiday.

Key elements

• Interestingly, this morning’s gapped up in price action stopped right below the 20510 resistance which is the pull-back resistance of the ascending channel bearish breakout. This breakout from the former ascending channel in place since 11 February 2016 low has reinforced our medium-term bearish view that the countertrend rally cycle from 11 February 2016 low of 18071 is likely to be over. Please click here to recap our latest weekly (medium-term) outlook/strategy published yesterday.
• The significant short-term support rests at 19800 which is defined by the swing lows area of 09/11 March 2016 and close to the 38.2% Fibonacci retracement of the countertrend rally cycle from 11 February 2016 low of 18071 to 18 March 2016 high of 20847.

Key levels (1 to 3 days)

Pivot (key resistance): 20510

Support: 19800

Next resistances:  21000 (weekly pivot)

Conclusion

We maintain our bearish bias on the Hong Kong 50 Index. As long as the 20510 daily short-term pivotal resistance is not surpassed, the Index is likely to see a further push down to test the 19800 support.

On the other hand, a break above the 20510 short-term pivotal resistance may put the bears on hold to see a potential “relief rebound” towards the 21000 weekly pivotal resistance.

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