hang seng daily outlook fri 13 may 2016 medium term downside target support at 19680500 almost met t
<p>(Click to enlarge charts) What happened earlier/yesterday The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has indeed shaped the expected decline […]</p>
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What happened earlier/yesterday
The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has indeed shaped the expected decline below the predefined short-term resistance at 20000/20160. In today’s morning session, the Index has hit the upper limit of our expected medium-term downside target (support) at 19680/500 set at the start of this week (recap over here).
Please click on this link for a recap on our previous daily short-term outlook/strategy.
Key elements
- The Index has printed a current intraday low of 19688 which is close to the medium-term downside target (support) of 19680/500 as per defined by the former swing high areas of 29 January/22 & 26 February 2016 and the 61.8% Fibonacci retracement of rally from 11 February 2016 low to 21 April 2016.
- The hourly Stochastic oscillator has reached an extreme oversold level and the 4 hour Stochastic oscillator has flashed a bullish divergence signal at its oversold region. These observations suggests that the current down move is being overstretched and downside momentum is waning which highlights the risk of a minor rebound/consolidation in price action at this juncture.
- The near-term resistance now stands at 20000 which is defined by the upper boundary of the short-term descending channel in place since 28 April 2016 high @11am.
- The next support after 19680/500 rests at 19050 which is the lower boundary of the aforementioned short-term descending channel.
Key levels (1 to 3 days)
Resistances: 20000 & 20590
Supports: 19680/500 & 19050
Conclusion
The medium-term downside target (support) at 19680/500 has almost been met and short-term technical elements are not supportive of a further potential decline. Turn neutral for now between 20000 and 19680/500.
Only a break above 20000 may trigger a minor rebound/consolidation towards the next resistance at 20590.
Disclaimer
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.
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