hang seng index potential push up above 22740 support 1827782016

Daily Outlook, Tuesday 23 Aug 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has traded sideways within a bullish ascending channel since hitting a high of 23210 seen on last Thursday, 18 August.

Key elements

• Current price action has pull-backed towards the lower boundary of the medium-term bullish ascending channel in place since 24 June 2016 low (Brexit) now acting as support at 22740.
• The aforementioned ascending channel support of 22740 also confluences with the minor swing low area of 17 August 2016 and close to the 23.6% Fibonacci retracement of the recent ongoing intermediate degree rally from 03 August 2016 minor swing low of 21683 to last week high of 23210.
• The hourly (short-term) Stochastic oscillator has continued to inch upwards and still has room to manoeuvre to the upside before reaching an extreme overbought level. These observations suggest that upside momentum of price action remains intact at least in the short-term.
• The significant short-term resistance remains at 23500 which is the upper limit of the 23200/500 risk zone where a pull-back may materialise (click here to recap the details as per highlighted in our latest weekly outlook/strategy published yesterday).

Key levels (1 to 3 days)

Pivot (key support): 22740

Resistances: 23160 & 23500

Next support: 22200 (medium-term).

Conclusion

Maintain short-term bullish bias. As long as the 22740 daily short-term pivotal support holds, the Index is likely to see a potential push up to retest the minor range top at 23160 before targeting the 23500 risk level.

However, failure to hold above the 22740 short-term pivotal support may negate the preferred bullish tone to open up scope for a deeper slide towards the medium-term pivotal support of 22200

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.