hang seng index weekly outlook update 28 sep to 02 oct risk of further decline to test 1980019400 lo

(Click to enlarge charts)

What happened earlier

The Hong Kong 40 Index (proxy for the Hang Seng Index) has gapped down in today’s opening session and broke below the ascending range support (weekly pivot) at 20800.

This latest price action has invalidated our initial medium-term (1-3weeks) push up scenario to test the 22400 range resistance.

Please click on this link for our initial weekly outlook.

Key elements

• The Index has broken below the ascending range support now turns pull-back resistance at 20950.
• The next significant resistance stands at 22260 which is defined by the range top in place since 28 August 2015 high.
• The daily (intermediate term) RSI oscillator remains bearish below its resistance and 50% neutrality level.
• The 4 hour (short-term) Stochastic oscillator still has some room for further downside (as depicted by the shaded pink box) before reaching its extreme oversold region. This observation suggests that the current downside momentum remains intact.
• The significant long-term key support stands at 19800/19400 which is defined by the mega long-term ascending trendline in place since December 1987 and a Fibonacci cluster (see monthly & weekly charts).

Key levels (1 to 3 weeks)

Intermediate term resistance: 20950/21360

Pivot (key resistance): 22260

Support: 19800/19400

Next resistance: 24000

Conclusion

The Index may now see a bounce first towards the intermediate resistance zone at 20950/21360 before another downleg occurs to target the long-term support zone at 19800/19400.

On the other hand, a clearance above the 22260 weekly pivotal resistance is likely to damage the expected medium term downtrend to see a push up towards the next resistance at 24000

Source:  Charts are from eSignal & City Index Advantage Trader

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