Featured Trade Hang Seng Index bearish reaction below key resistance
The 3-month rally from its Jan 2019 swing low has started to shown signs of bullish exhuastion.
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Short-term technical outlook on Hang Seng Index/Hong Kong 50 (Wed 20 Mar)
Key technical elements
- The recent push up of 5.7% seen on the Hong Kong 50 Index (proxy for Hang Seng Index futures) from its 08 Mar 2019 minor swing low of 28011 has stalled at its 29510 key medium-term resistance as per highlighted in our latest weekly technical outlook report published earlier on Mon (click here for a recap).
- The 29510 key medium-term resistance also now coincides closely with a Fibonacci expansion cluster derived from the lower time frame hourly price action from its 08 Mar 2019 low of 28011 (see daily chart).
- The Index has broken below a minor ascending trendline support in place since 08 mar 2019 low now turns pull-back resistance at 29400. Prior to the breakdown, the daily RSI oscillator has flashed a bearish divergence signal since 06 Mar 2019 at its overbought region.
- The shorter-term hourly RSI oscillator has indicated short-term downside momentum remains intact as it remains below the 50 level and still has room to manoeuvre to the downside before it reaches the oversold region.
- The next significant near-term supports rests at 29180 (former minor swing high areas of 04/15 Mar 2019) and 28730 (the minor range support of 13/14 Mar 2019 & close to 50% Fibonacci retracement of the recent push up from 08 Mar 2019 low to 19 Mar 2019 U.S. session high).
Key Levels (1 to 3 days)
Intermediate resistance: 29400
Pivot (key resistance): 29510
Supports: 29180 & 28730
Next resistance: 30000
Conclusion
The 3-month rally from its 03 Jan 2019 low of 24886 has started to lose upside momentum right below the 29510 key medium-term resistance where the odds of a multi-week decline increases at this juncture.
If the 29510 key pivotal resistance is not surpassed, the Index is likely to stage a potential push down to target the next near-term supports at 29180 and 28730 in the coming days.
On the other hand, a clearance with a daily close above 29510 invalidates the bears for a continuation of the rally to target the intermediate resistance at 30000 (psychological & 1.382 Fibonacci expansion of the recent push up from 08 Mar 2019 low to 12 Mar 2019 minor high projected from 14 Mar 2019 minor low).
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