hang seng daily outlook wed 27 jan 2016 19500 remains the potential upside trigger level 1795002016

(Click to enlarge charts)

The Hong Kong 40 Index (proxy for the Hang Seng Index futures) has staged a push up in the U.S. session but it still failed to break above the trendline resistance that has linked up the lower highs since 08 January 2016.

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

Key elements

• The Index has failed to make another headway above the short-term trendline resistance which is just below the minor swing high at 19500 and continued to make drift lower in line with the weakness since in the China stock market.
• The China A50 Index that consists of the top 50 mainland China listed stocks based on market capitalisation is now reaching a key medium-term support at 8770 despite the on-going selling pressure (recap here as per highlighted in our latest weekly outlook/strategy). A possible consolidation may take place at around the 8770 support level based on current technical factors such as the exit target of the “Double Top” has been reached and momentum oscillators are at oversold region).
• The next significant resistance remains at the 20226/380 zone which is defined by the former range support of that linked the swing lows area of 24 August  and 29 September 2015 and the 50% Fibonacci retracement of the recent steep decline from 24 December 2015 high to 21 January 2016 low (see daily chart).

Key levels (1 to 3 days)

Pivot (key support): 18540

Resistances: 19500 & 20226/380

Next support: 18200

Conclusion

19500 remains the potential upside trigger for a further upside movement to target the next resistance at 20226/380.

However, a break below the 18540 pivotal support may see a further slide to test the next support at 18200.

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