(Click to enlarge charts)
What happened yesterday
The Hong Kong 40 Index (proxy for the Hang Seng Index) has shaped the expected minor pull-pack towards the key short-term support zone at 23100/22880 before a rebound took place in this morning session, 05 November 2015
Please click on this link for a recap on our previous daily outlook/strategy.
- Current price action has managed to hold above the pull-back support of the short-term ascending channel bullish breakout and formed an hourly bullish “Hammer” candlestick pattern which indicates a potential bullish reversal in price action.
- The hourly (short-term) Stochastic oscillator that gauges momentum has just exited from its oversold region which suggests a revival in upside momentum.
- The next intermediate resistance stands at 23530 which is defined by the swing high of 23 October 2015 and the 3.61.8 Fibonacci projection from 02 Nov 2015 low @9am to 02 Nov 2015 high @11am projected from the 02 Nov 2015 low @3pm.
Key levels (1 to 3 days)
Pivot (key support): 22880
Next support: 22530 & 22260/22180 (weekly pivot)
Short-term technical elements are still positive and as long as the 22880 daily pivotal support holds, the Index is likely to shape a further push up to target the 23530 resistance in the first step.
On the other hand, a break below the 22880 pivotal support is likely to see a “bull-trap” (failure bullish breakout) for another round of decline to test the next support at 22530 before the key 22260/22180 zone (pull-back support of the ‘Double Bottom” bullish breakout).
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