hang seng index daily outlook tues 13 oct potential bullish breakout above 22475 support 2430562015

(Click to enlarge chart)

What happened earlier

The Hong Kong 40 Index (proxy for the Hang Seng Index) has traded sideways yesterday.

Key elements

• The Index has shed 0.7% from yesterday’s high of 22651 seen in the overnight U.S. session to a current low of 22475 printed today.
• Despite its weak opening, the Index is still holding above the short-term support at 22475 which is the lower boundary of a short-term triangle range consolidation pattern (in pink) in place since the 07 October 2015 high.
• The Index is now coming close to the apex of the triangle range consolidation pattern where a price action breakout is likely to occur soon.
• The hourly (short-term) Stochastic oscillator has started to inch upwards from its oversold region which suggests a revival in upside momentum.
• The significant short-term resistances will be at 22890 and 23170  which are defined by the 0.618/ 0.764 Fibonacci projection of the 29 September 2015 low to 06 October 2015 low @1pm.

Key levels (1 to 3 days)

Pivot (key support): 22475

Resistance: 22890 & 23170

Next support: 22260/22180 (weekly pivot).

Conclusion

As long as the 22475 daily (short-term) pivotal support holds, the Index is likely to shape a potential bullish breakout from its triangle range pattern to target 22890 before 23170.

However, failure to hold above the 22475 short-term pivotal support may negate the bullish tone to see a slide towards the 22260/22180 weekly pivotal support (pull-back support of the “Double Bottom” bullish breakout).

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