hang seng index potential up move above 2320023000 support 1830942016

Daily Outlook, Tues 20 Sep 2016

(Click to enlarge chart)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has plummeted by 0.7% in today’s Asian opening session to print a current intraday low of 23395 in line with some softness seen in the major benchmark U.S. stock indices as markets participants await on the outcome on the two major risk events that occur tomorrow, 21 September (latest momentary polices from Bank of Japan & the Fed).

Technically speaking, the current intra-day pull-back may be short-lived as elements are still positive on the Hong Kong 50 Index. Please click on this link for a recap on our latest weekly technical/outlook published yesterday, 19 September.

Key elements

• The Index is still holding above the intermediate pull-back support of 23200/23000 which also confluences with the 23.6% Fibonacci retracement of the recent up move from 24 June 2016 low (Brexit) to 09 September 2016 high.
•  The hourly Stochastic oscillator has dipped down but it is now fast approaching an extreme oversold level. This observation suggests that the current short-term downside momentum is overstretched at this juncture and the Index may see a bullish reversal above the near-term minor support at 23360.
• The intermediate resistance remains at 23820 (gap) which is also close to the 50%/61.8% Fibonacci retracement of the recent decline from the 09 September 2016 minor swing high to last week low of 23042.

Key levels (1 to 3 days)

Intermediate support: 23360

Pivot (key support): 23200/23000

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 before targeting the next resistance at 24500.

On the other hand, a break below the 23200/23000 short-term pivotal support is likely to negate the preferred recovery for another round of slide to test the 22700 medium-term pivotal support.

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