hang seng index further potential upside above 22250 support 1826052016

Daily Outlook, Thursday 11 Aug 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has been resilient as it managed to recover this morning’s earlier losses to inch back up towards the current weekly high of 22629 set on Wednesday, 10 August.

Key elements

• The Index remains in a bullish dynamic as it continues to evolve within a medium-term bullish ascending channel in place since 24 June 2016 low (Brexit). This morning’s gapped down in price action has managed to be held by a steeper short-term ascending trendline support (depicted in dotted dark blue) at 22250 which also confluences with the minor swing high areas of 26 July/01 August 2016.
• The significant near-term resistances to watch stands at 22810/900 (Fibonacci projection cluster) and 23200 (lower limit of our expected medium-term target & upper boundary of the aforementioned ascending channel) Please click on this link to recap our latest weekly technical outlook/strategy published earlier.
•  The 4 hour Stochastic oscillator has started to inch upwards just above the oversold region which suggests that short-term upside momentum of price action remains intact.

Key levels (1 to 3 days)

Pivot (key support): 22250

Resistances: 22810/900 & 23200

Next support: 21700 (medium-term pivot)

Conclusion

Further potential upside movement. As long as the 22250 daily short-term pivotal support holds, the Index is likely to shape a further potential upside movement to target the next resistances at 22810/900 and 23200.

On the other hand, failure to hold above the 22250 short-term pivotal support is likely to negate the preferred bullish tone for a deeper pull-back to test the medium-term pivotal support of 21700.

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