hang seng index daily outlook for wed 26 aug potential push up in progress above 20800 support 11236

(Click to enlarge chart)

What happened yesterday

The Hong Kong 40 Index (proxy for the Hang Seng Index) has pushed higher from Monday, 24 August 2015 low after a drastic selloff that continued since last week

Key elements

• The Index remains capped below by its short-term trendline resistance joining the highs since 11 August 2015 now at 22710.
• The 22710 trendline resistance also corresponds closely with the 50% Fibonacci retracement of the recent steep decline from 11 August 2015 high @ 9am to 24 August 2015 low @9pm.
• The hourly Stochastic oscillator is coming close to its oversold region which suggests a possible revival in upside momentum for the Index.

Key levels (1 to 3 days)

Pivot (key support): 20800

Resistance: 22470/22710

Next support: 20070

Conclusion

Based on the current technical elements, the Index is likely to see another round of potential push up to test the 22470/22710 resistance zone. Do bear in mind that there is still no concrete elements to suggest that we have seen the “bottom” at Monday, 24 August 2015 low. Based on the Elliot Wave Principal, this current rebound in price action is likely corrective in nature to shape the 4/ before another downleg, wave 5/ occurs to complete the 5 wave bearish structure in place since 21 July 2015 high.

On the flipside, failure to hold above the 20800 pivotal support is likely to invalidate the push up scenario to see a slide to retest the 24 August 2015 low at 20070.

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