hang seng daily outlook wed 30 mar 2016 right at 20740 trendline resistance 1803722016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has traded sideways yesterday below the 20510 short-term pivotal resistance. Please click on this link for a recap on our previous short-term daily outlook/strategy.

In today’s morning session, 30 March 2016, the Index has staged a gap up of 1.8% to print a current high of 20716.

Key elements

• Despite this morning gapped up in price action, the Index has not surpassed the trendline resistance that has linked the “lower highs” since the 23 October 2015 high of 23452.
• It is now testing the trendline resistance now at 20740 which also confluences with the 76.4% Fibonacci retracement of the recent decline from 18 March 2016 high to the 24 March 2016 low of 20155.
• The significant short-term support now rests at today’s gap up and the minor swing low area of 29 March 2016 @9pm which gives us a zone of 20300/270.
• The hourly (short-term) Stochastic oscillator has reached its overbought region which suggests limited upside potential at this juncture.

Key levels (1 to 3 days)

Pivot (key resistance): 20740

Supports: 20300/270 & 19800

Next resistance:  21000 (weekly pivot)

Conclusion

The Index is now right below the 20740 trendline resistance where it faces the risk of at least a pull-back towards the 20300/270 support zone in the first step.

However, a break above the 20740 trendline resistance is likely to put the bears on hold for a further potential push up towards the 21000 weekly pivotal resistance.

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