hang seng index daily outlook fri 04 dec sideways between 22100 and 22600 1789262015

(Click to enlarge chart)

What happened yesterday

The Hong Kong 40 Index (proxy for the Hang Seng Index) has pushed and attempted to retest the 22600 “stubborn” resistance but retraced in the overnight session as the European Central Bank (ECB) has disappointed market expectations on its latest monetary easing polices.

Key elements

• Price action of the Index has tumbled again but managed to stall at the 22100 short-term support which also confluences with the 61.8% Fibonacci retracement of the recent up move from 30 November 2015 low to 02 December 2015 high @2pm.
• The resistance to watch remains at 22600 which is the descending trendline from 26 May 2015 high.
• The hourly (short-term) Stochastic is now attempting to exit from its oversold region which suggests that the downside momentum of the current decline from yesterday, 03 December 2015 high has started to wane.

Key levels (1 to 3 days)

Pivot (key support): 22100

Resistance: 22600

Next support: 21830 (excess low of weekly pivot)

Conclusion

The Index is now expected evolve in a sideways configuration again with a potential push up to retest the “stubborn” resistance at 22600, the descending trendline that is capping the Index since 26 May 2015 high.

On the other hand, a break below the 22100 short-term pivotal support may invalidate the push up scenario for a slide to retest the lower limit (excess) of the weekly pivotal support at 21830.

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