hang seng daily outlook thurs 10 mar 2016 further potential push up above 20030 1801062016

(Click to enlarge charts)

What happened yesterday/earlier

The Hong Kong 50 Index (proxy for the Hang Seng Index futures) has indeed staged the expected upside movement as we have highlighted in in our previous short-term daily outlook/strategy published yesterday that the pull-back in price action from last Friday, 04 March 2016 high of 20322 has reached its potential inflection point for an upside reversal (click here for a recap).

The Index has rallied by 1.9% from yesterday low of 19833 and it continues to inch higher before the European Central Bank (ECB)’s monetary policy announcement later as market participants are expecting more easing measures from ECB.

 Key elements

• The Index continues to evolve in a “stable “ bullish dynamic as it remains within an ascending channel in place since the start of the on-going countertrend rally in place since 11 February 2016 low at 18056.
• On the short-term, the Index is now approaching a significant resistance zone of 20380/520 which is defined by the former swing lows area of 24 August 2015 and 29 September 2015, upper boundary of the bearish descending channel in place since 26 May 2015 high and a Fibonacci cluster.
• The daily (medium-term) RSI oscillator is still positive above its pull-back support and the 50% level which suggests that upside momentum of price action remains intact.
• The significant short-term support now rests at 20030 which is former minor swing high area of 08 March 2016 @9pm where the Index staged the “last push down” of the pull-back from last Friday high of 20322.

Key levels (1 to 3 days)

Pivot (key support): 20030

Resistance: 20380/520

Next support: 19720/600

Conclusion

Technical elements remain positive except the price action is coming close to a significant graphical resistance at 20380/520. Therefore, we have tightened the short-term pivotal support to 20030 for a potential push up to test the aforementioned near term resistance zone of 20380/520.

On the other hand, a break below the 20030 short-term pivotal support may put the bulls on hold to see a decline to retest the lower boundary of the ascending channel and gap support at 19720/600

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