hang seng daily outlook wed 02 mar 2016 bullish tone remains intact eyeing 20230 resistance next 179

(Click to enlarge charts)

What happened yesterday/earlier

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has held above 19030 predefined short-term pivotal support and shaped the recovery towards the 19720 range top. In this morning session, 02 March 2016, the Index has gapped up above the 19720 in line with a strong closing seen in the major U.S. benchmark stock indices.

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

Key elements

• The Index has shaped the expected bullish breakout from the “Inverse Head & Shoulders” configuration as per highlighted in our weekly technical outlook/strategy that the Index is in the midst of undergoing the second phase of the countertrend rally (click here).
• The pull-back support zone of the “Inverse Head & Shoulders” bullish breakout stands at 19720/600 which is also the opening gap seen this morning.
• The next significant short-term resistance will be at 20380 which is defined by the former swing lows area of 24 August and 29 September 2015 , close to the 50% Fibonacci retracement of the steep decline from 24 December 2015 high to 11 February 2016 low and the upper boundary of the ascending channel in place since 11 February  2016 low

Key levels (1 to 3 days)

Pivot (key support): 19720/600

Resistances: 20230

Next support: 19300/180

Conclusion

Bullish tone remains intact and any potential pull-back is likely to be held by the 19720/600 short-term pivotal support for another push up to target the 20230 resistance.

On the other hand, failure to hold above the 19720/600 pivotal support may negate the bullish tone for a deeper pull-back to test the lower boundary of the ascending channel from 11 February 2016 low now at 19300/180

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