hang seng index potential direct rise in progress 1823202016

Daily Outlook, Wed 27 July 2016

(Click to enlarge chart)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has shaped a minor setback from yesterday’s high of 22301. Interestingly, the minor setback/pull-back has tested and held above our predefined short-term intermediate support of 22070.

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

Key elements

• The Index continues to evolve within a bullish short-term ascending channel in place since 27 June 2016 low with the upper boundary/resistance now at 23000 which also confluences with a Fibonacci projection level.
• The key short-term support to watch now will be at 22070 which was yesterday’s minor swing low area that held the pull-back from 22301 high.
• The hourly Stochastic oscillator continues to inch upwards and still has room to manoeuvre to the upside before reaching its extreme overbought level. These observations suggest that short-term upside momentum of price action remains intact.

Key levels (1 to 3 days)

Pivot (key support): 22070

Resistances: 22700 & 23000

Next supports: 21840 & 21380 (weekly pivot)

Conclusion

Maintain bullish bias. We have tightened the daily short-term pivotal support to 22070 for a potential further push up towards 22700 and even 23000.

However, a break below the 22070 short-term pivotal support is likely to invalidate the preferred direct rise scenario for a pull-back to test the lower boundary/support of the ascending channel at 21840. Only a break below 21840 may open up scope for a deeper slide towards this week medium-term pivotal support set at 21380.

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