hang seng index weekly outlook 14 sep to 18 sep potential push up above 2100020860 support within ra

(Click to enlarge charts)

What happened last week

The Hong Kong 40 Index (proxy for the Hang Seng Index) has managed to stage a breakout from the 21000 upside trigger level and continued to climb higher.

Please click on this link for a review on our previous weekly outlook.

Key elements

• Based on the Elliot Wave Principle, the Index is in a (a),(b),(c) “Flat” correction configuration of a larger degree wave B that has started from the high of 07 November 2010. From the 26 April 2015 high of 28600, current price movement is in the midst of undergoing the bearish (c) leg of the “Flat” correction that consists of a minimum of five waves from a lesser degree (see weekly chart).
• The weekly (long-term) Stochastic oscillator has dipped into its oversold region which suggests that the multi-month downside momentum in place since late May 2015 has abated (see weekly chart).
• The Index is still holding above the “Black Monday”, 24 August 2015 low of 20070 which is also the low of the weekly “Doji” (see weekly chart).
• The daily (intermediate term) RSI oscillator has broken above its former trendline resistance now turns pull-back support (see daily chart).
• Since the  “Black Monday”, 24 August 2015 low of 20070, the Index has evolved into an impending bullish  “Double Bottom” chart configuration with its neckline resistance at 22400 (see daily & 4 hour charts).
• The next significant resistance stands at the 24000/24900 zone which is defined by the trendline resistance joining the highs since 26 May 2015 @8am, 50% Fibonacci retracement of the down move from 26 May 2015 high @8am to 24 August 2015 low @8pm and the exit potential of the bullish “Double Bottom” configuration (see 4 hour chart).
• Since the “Black Monday”, 24 August 2015 low of 20070, the Index is being support by an ascending trendline now at 20860 (see 4 hour chart).
• The significant long-term support stands at 19400 which are defined by the mega long-term ascending trendline in place since December 1987 and a Fibonacci cluster (see monthly chart).

Key levels (1 to 3 weeks)

Intermediate support: 21000

Pivot (key support): 20860

Resistance: 22400 & 24000/24900

Next support: 20070 & 19400 (long-term)

Conclusion

The Index is still trading within a sideways configuration and as long as the 20860 weekly pivotal support holds, the Index is likely to see a push up towards 22400 (neckline resistance) of the “Double Bottom” configuration. Only a break above 22400 may trigger a further rally towards the 24000/24900 zone.

However, a break below the 20860 pivotal support may damage the bullish tone for a slide to retest the “Black Monday”, 24 August 2015 low of 20070.

Source:  Charts are from eSignal & City Index Advantage Trader

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