hang seng index daily outlook for fri 14 aug 24000 cleared eyeing 24900 next 1027692015

(Click to enlarge charts)

Key elements

• The Hong Kong 40 Index (proxy for the Hang Seng Index) has managed to “recapture” the 24000 former short-term range support. This observation reinforces the “bear trap” scenario seen two days ago on 12 August 2015 (see 1 hour chart).
• The Index continues to hold above the 23650/23450 key long-term support (lower boundary of the ascending channel in place since the major market bottom of 26 October 2008) (see weekly chart).
• The hourly Stochastic oscillator has just inched up above its oversold region which suggests the revival of upside momentum (see 1 hour chart).
• The next significant short-term resistance remains at 24900 which is the 2-week+ range top in place since 28 July 2015 (see 1 hour chart).

Key levels

Intermediate support: 23940

Pivot (key support): 23650/23450

Resistance: 24320 & 24900

Next support: 22700

Conclusion

The clearance above the 24000 level has reinforced the “push up” scenario for the Index towards 24320 before retesting the 24900 short-term range top (resistance).

On the contrary, a crack below the 23650/23450 pivotal support is likely to invalidate the bullish expectation to see a slide to target the 08 July 2015 swing low at 22700.

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