hang seng daily outlook thurs 07 apr 2016 20340425 is the key short term resistance to watch for ano

 

(Click to enlarge chart)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has traded sideways before it staged an up move in today’s morning session, 07 April 2016 driven by last night rally seen in the U.S. major stock indices.

Interestingly, the rally seen in the Hong Kong 50 Index has managed to stall at the intermediate resistance zone of 20340/425 as per highlighted in our previous daily short-term outlook/strategy (click here for a recap).

Key elements

• The Index has managed to retreat from the trendline resistance that has linked the lower highs since 30 March 2016 high@11pm and closely the 38.2% Fibonacci retracement of the recent decline from 30 March 2016 high of 20994 to 06 April 2016 low of 20051
• The hourly (short-term) Stochastic oscillator has turned down from its overbought region and still has room for further potential downside before reaching its extreme oversold level.
• The significant support remains at 19800 which is defined by the swing lows area of 03/09/11 March 2016 and the 38.2% Fibonacci retracement of the prior countertrend rally from 12 February 2016 low to 30 March 2016 high of 20988

Key levels (1 to 3 days)

Pivot (key resistance): 20340/425

Support: 20080 & 19800

Next resistance:  20520/630

Conclusion

The Index has rallied and retreated from 20340/425 resistance zone which confluences with a bunch of technical elements. Therefore, we have tightened the daily short-term pivotal resistance to 20340/425 for a further potential decline to retest the 20080 minor swing low area before targeting the next support at 19800.

However, a break above the 20340/425 short-term pivotal resistance is likely to negate the bearish tone to see a push up towards the next resistance at 20520/630 (50%/61.8% Fibonacci retracement of the recent decline from 30 March 2016 high to 06 April 2016 low).

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