hang seng index daily outlook thurs 19 nov gapped up with next resistance at 22870 1772312015

(Click to enlarge chart)

Key elements

• Price action of the Hong Kong 40 Index (proxy for the Hang Seng Index)  has gapped up in today’s opening session with intermediate support at 22390 (upper limit of the gap).
• The key pivotal support remains at 22260/22180 which is the pull-back support of the “Double Bottom” bullish breakout and the lower limit of today’s gapped up in price action (click here for details).
• The intermediate resistance to watch will be at 22870 which is also the current medium-term upside trigger (link here for more details as per highlighted in our latest weekly outlook/strategy).
• The hourly (short-term) Stochastic oscillator has reached its extreme overbought level which suggests a risk of a pull-back as upside momentum has appeared to be “overstretched”.

Key levels (1 to 3 days)

Intermediate support: 22390

Pivot (key support): 22260/22180

Resistance: 22870

Next support: 21830

Conclusion

The Index may see a pull-back first to test the intermediate support at 22390 before a potential push up to target the 22870 resistance.

On the other hand, failure to hold above the 22260/22180 pivotal support is likely to negate the bullish tone for a retest on this Monday, 16 November 2015 low at 21830

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