hang seng index bullish tone remains intact above 21840 support 1822932016

Daily Outlook, Tues 26 July 2016

(Click to enlarge chart)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has managed to shrug off yesterday’s lacklustre performance seen in the benchmark U.S. stock indices and continued to rally towards our expected target/resistances. Hang Seng is now up by 0.91% on an intraday basis.

Interestingly, the Index has managed to outperform its regional peers as it shot up by 5% till to date after the bullish breakout seen from its former “Triangle range/consolidation” configuration on 12 July 2016. Please click on this link for more details on our latest weekly technical outlook/strategy published yesterday.

Key elements

• Since the 27 June 2016 low, the Index has continued to evolve within a short-term bullish ascending channel with the lower boundary (support) now at 21840. This channel’s support also confluences with the minor swing low areas of 20 July/26 July 2016 and close to the 23.6% Fibonacci retracement of the recent rally from 06 July 2016 low to the current intraday high of 22227.
• The upper boundary of the aforementioned ascending channel now stands at 22700 which also confluences with a Fibonacci projection cluster.

Key levels (1 to 3 days)

Intermediate support: 22070

Pivot (key support): 21840

Resistances: 22700 & 23200

Next support: 21380 (weekly pivot)

Conclusion

Maintain bullish bias. As long as the 21840 daily short-term pivotal support holds, the Index is likely to see a further potential push up to target the 22700 resistance in the first step within the ascending channel configuration.

On the other hand, failure to hold above the 21840 short-term pivotal support may negate the preferred bullish tone for a deeper pull-back towards this week medium-term pivotal support of 21380.

Disclaimer

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