hang seng index daily outlook thurs 03 dec poised for a potential bullish breakout watch 22600 17890

(Click to enlarge chart)

What happened earlier

The Hong Kong 40 Index (proxy for the Hang Seng Index) has shaped the expected push up to test the 22600 medium-term potential upside trigger before a pull-back occurred.

Key elements

• The Index has gapped down in this morning’s opening session but managed to hold above the 22100 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 “stubborn” trendline resistance that is linking the lower highs since 26 May 2015 remains at 22600 which is also the medium-term potential upside trigger level (click herefor details in our latest weekly strategy/outlook).
• The next short-term resistance to watch will be at 23000 which is the defined by the minor swing highs area of 12 November and 26 November 2015 and a Fibonacci cluster (61.8% Fibonacci retracement from 23 November high to 30 November 2015 low + 1.00 Fibonacci projection of the up move from 30 November 2015 low to 02 December 2015 high @2pm projected from today’s current low of 22248).
• The hourly (short-term) Stochastic oscillator has started to inch upwards from its oversold region which suggests a revival in upside momentum.
• Based on the Elliot Wave Principal, the Index may have completed the minor corrective wave 2 just above the 22100 support and it is now undergoing the bullish impulsive wave 3.

Key levels (1 to 3 days)

Pivot (key support): 22100

Resistance: 22600 & 23000

Next support: 21830 (excess low of weekly pivot)

Conclusion

As long as the 22100 daily (short-term) pivotal support hold and a break above the 22600 intermediate resistance is likely to add impetus for another round of potential rally to target the next resistance at 23000 in the first step.

On the flipside, failure to hold above the 22100 short-term pivotal support may invalidate bullish scenario for a slide to retest the lower limit (excess) of the weekly pivotal support at 21830.

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