hang seng index daily outlook friday 15 oct potential direct rise above 2263022470 support 157809201

(Click to enlarge chart)

What happened yesterday

The Hong Kong 40 Index (proxy for the Hang Seng Index) has traded sideways and continued to hold above the 2260/22180 “crucial” weekly pivotal support (neckline of the “Double Bottom” bullish breakout.

Please click on this link for a recap on our previous daily outlook.

Key elements

• Today’s morning price action has broken above the short-term trendline resistance (in dotted pink) joining the highs since 09 October 2015 as expected in the first hour of trading on the cash market. It is now acting as a pull-back support at 22630.
• The hourly (short-term) RSI remains bullish and it has also staged a bullish breakout above its former trendline resistance (in dotted green) and the 50% neutrality level. This observation suggests that upside momentum remains intact.
• The significant resistances to watch in the short-term stands at 23170 follow by 23500/23600 which are defined by the 0.764/1.00 Fibonacci projections from 29 September 2015 low to 06 October 2015 low @2pm

Key levels (1 to 3 days)

Intermediate support: 22700/22630

Pivot (key support): 22470

Resistance: 23170 & 23500/23600

Next support: 22260/22180 (weekly pivot)

Conclusion

After three days of sideways movement, the Index has finally shown signs of an increase in upside momentum as expected (refer to the latest short-term key elements as highlighted above). As long as the 22470 daily (short-term) pivotal support holds, the Index is likely to see a direct rise now to target 23170 and even the 23500/23600 resistance zone.

However, a break below the 22470 pivotal support may jeopardise the bullish tone to see another dip down to retest the 22260/22180 weekly pivotal support.

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