hang seng further potential downside pressure below 2375023880 2687962017

Short-term Technical Outlook (Fri, 03 Mar 2017)

(Click to enlarge chart)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has continued its downwards spiral since the bearish break of its former ascending trendline support from 23 December 2016 low on 24 February 2017.

Yesterday, it broke below the 23750 medium-term downside trigger level as per highlighted in our last weekly technical outlook report (click here to recap). Interestingly, such weakness came ahead of a key China’s political event, the annual “Two Sessions” meeting from 03 March to mid-Mar 2017. One key highlight will be on this Sunday, 05 March 2017 where Premier Li Keqiang will deliver his government report on the current state of the economy and future economic policies as well as 2017 GDP growth forecast.

Key technical elements

• The Index is now being capped below a descending trendline from 23 February 2017 high now resistance at 23880 which also confluences with the 61.8% Fibonacci retracement of the recent decline from 02 March 2017 high to today’s current intraday low at 23511.
• The hourly Stochastic oscillator continues to inch downwards and still has room to manoeuvre to the downside before reaching an extreme oversold level. These observations suggest that downside momentum of price action remains intact.
• The  next significant near-term support rests at 23200/150 which is defined by the minor swing low area of 08 February 2017 and a Fibonacci cluster.

Key levels (1 to 3 days)

Intermediate resistance: 23750

Pivot (key resistance): 23880

Support: 23200/150

Next resistance: 24220

Conclusion

As long as the 23880 short-term pivotal resistance is not surpassed, the Index may see a further potential push down to target the next support at 23200/150.

On the other hand, a clearance above 23880 is likely to put the bears on hold for push up to retest the previous swing high area of 24220.

Charts are from City Index Advantage TraderPro

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