hang seng index maintain short term bullish stance above 2320023040 support 1830112016

Daily Outlook, Wed 14 Sep 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has indeed staged a pull-back as expected after a strong push up seen in yesterday’s Asian session. The pull-back was slightly beyond our expectation as it challenged the 23200 predefined short-term pivotal support in yesterday’s early U.S. session in line with the 1.00% drop seen in the major benchmark U.S. stock indices.

The most important aspect of the yesterday’s price movement is that the Hong Kong 50 Index has managed to stage a strong opening in today’s Asian session as it traded back above the 23200 short-term pivotal support.

Please click on this link for a recap on our previous short-term daily technical outlook/strategy.

Key elements

• The hourly Stochastic oscillator has flashed a bullish divergence signal which indicates that the downside momentum of yesterday’s decline in price action has started to abate. These observations further reinforce our preferred recovery scenario at this juncture.
• The daily (medium-term) RSI oscillator remains bullish above its support and the 50% level.
• The intermediate resistance remains at 23820 (gap).
• The key short-term key support remains at 23200 with excess at 23040 (yesterday’s U.S. session low) which is defined by the former minor swing high areas of 18 August/01 September 2016 and the 23.6% Fibonacci retracement of the advance from 24 June 2016 low to 09 September 2016 high of 24406.

Key levels (1 to 3 days)

Pivot (key support): 23200/23040

Resistances: 23820 & 24500

Next supports: 22700 (medium-term pivot)

Conclusion

Maintain bullish stance for a potential recovery to towards the 23820 intermediate resistance in the first step. However, a break below the 23200/23040 short-term pivotal support is likely to to negate the preferred bullish up move for another round of slide to test the 22700 medium-term pivotal support.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.