hang seng daily outlook thurs 14 jan 2016 challenging the 19800700 key long term support 1793182016
<p>(Click to enlarge charts) What happened earlier The Hong Kong 40 Index (proxy for the Hang Seng Index) has gapped down in today’s opening session […]</p>
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What happened earlier
The Hong Kong 40 Index (proxy for the Hang Seng Index) has gapped down in today’s opening session and broke below the short-term pivotal support at 19900. Our preferred short-term preferred rebound scenario has been invalidated.
Please click on this link for a recap on our previous short-term daily outlook/strategy.
Key elements
- Current price action has pierced below the 19800/700 key long-term as it is a derived from the weekly chart, we need to have a weekly close below it to validate a long-term strategic bearish view for the Index support (see weekly chart).
- On the shorter-term, this morning gapped down has managed to stall at the pull-back support of the trendline resistance bullish breakout (in dotted green) at 19470 (see daily chart)
- The hourly (short-term) Stochastic oscillator has traced out a bullish divergence signal at its oversold region which suggests that this morning’s downside momentum has started to abate.
- The intermediate resistance to watch will be the opening gap at 19950.
Key levels (1 to 3 days)
Supports: 19800/700 (long-term) & 18580
Resistances: 19950 & 20680
Conclusion
We need to have a weekly close below the 19800/19700 key long-term support to validate the start of potential serve correction for the Index. In short-term trading, technical elements are mixed and we prefer to have a neutral stance between 19950 and 19470.
Only a break above the 19950 gap resistance is likely to renew the short-term rebound opportunity to target the 20680 resistance which is the former range bottom area of “Black Monday”, 24 August 2015 to 29 September 2015.
However, a violation below the 19470 intermediate support may trigger another round of waterfall slide towards the next support at 18580.
Disclaimer
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