hang seng index view unchanged potential upleg remains intact 1822142016

Daily Outlook, Wed 20 July 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has traded above the 21500 predefined short-term pivotal support. In today’s early Asian session (20 July), the Index rallied as expected (printed a current intraday high of 21878) which has almost met our short-term target/resistance at 22170 (a margin of 1.31%).

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

Key elements

• The Index has continued to evolve within a bullish ascending channel (depicted in green) in place since 27 June 2016 low with its upper boundary that is coming to act as a resistance at 22430.
• Interestingly, the aforementioned ascending channel’s upper boundary also confluences with the upper boundary of a steeper ascending channel (depicted in blue) from 08 July 2016 low @11am SGT and a Fibonacci projection cluster (see 1 hour chart).
• The daily RSI oscillator remains bullish above its ascending trendline and the 50% level which suggests that upside momentum of price action remains intact.

Key levels (1 to 3 days)

Intermediate support: 21720

Pivot (key support): 21500

Resistances: 22170 & 22430

Next support: 21100/21000 (medium-term pivot)

Conclusion

View unchanged, further potential upside. As long as the 21500 daily short-term pivotal support holds, the Index is likely to see a further potential push up to test 22170 before targeting  22430.

However, a violation below the 21500 short-term pivotal support may negate the preferred bullish tone to see a pull-back towards the 21100/21000 medium-term pivotal support set for this week.

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