hang seng short term targetresistance almost reached turn neutral 1819242016

Daily Outlook, Wed 29 June 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has soared as expected from the lower boundary (support) of the medium-term “Triangle range” configuration in line with the rebound seen across risk assets, post Brexit.  Current price action is now coming close to the predefined short-term target/resistance at 20470/550 (printed an intraday high of 20375).

Please click here to recap our prior short-term daily technical outlook/strategy.

Key elements

• The Index is now trading in the middle of the “Triangle range” configuration in place since 21 April 2016 high which is right below the short-term resistance zone of 20470/550.
• The aforementioned resistance zone of 20470/550 is defined by the minor swing high of 24 June 2016 high @10pm that has been tested twice in the past as well as a Fibonacci cluster.
• Both the 4 and 1 hour Stochastic oscillator are at/coming close to their respective extreme overbought levels which suggest limited upside potential for price action at this juncture.
• The near-term support to watch will be at 20000 which is defined by the 61.8% Fibonacci retracement of the rally seen from Monday, 27 June low of 19710 to today’s current intraday high.

Key levels (1 to 3 days)

Supports: 20000 & 19880/800

Resistances: 20470/550 & 21170

Conclusion

Turn neutral in short-term. As price action of the Index is now coming close to the first expected target/resistance of 20470/550 and other technical elements are advocating for limited upside potential. Thus, it will be prudent to turn neutral for now as the Index may start to consolidate/range bound between 20000 & 20470/550.

Only a break above 20550 is likely to trigger a further push up for the Index to target the “Triangle range” top/resistance at 21170.

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