hang seng daily outlook tues 02 feb 2016 19300 is the support to watch for today to keep bullish bia

(Click to enlarge charts)

What happened yesterday

The Hong Kong 50 Index (proxy for the Hang Seng Index) has shaped the expected pull-back after the bullish breakout seen last Friday, 29 January 2016.

Key elements

• The current pull-back has managed to stall at the 19300 minor support of the former swing highs dated from 27 January 2016@9am and 28 January 2016 @5pm which also confluences with the trendline support from 21 January 2016 low.
• In conjunction with the trendline support seen on the Index’s price action, the hourly RSI oscillator has also managed to hold and staged a rebound from its trendline support. This observation suggests that upside momentum remains intact.
• The significant resistance stands at 20230/380 which is close to the 50% Fibonacci retracement of the steep down move from 24 December 2015 low to 21 January 2016 low and our current expected medium-term upside target (click here for more details as per highlighted in our latest weekly outlook/strategy).

Key levels (1 to 3 days)

Pivot (key support): 19300

Resistances: 20230/380

Next support: 19000 (medium-term pivot)

Conclusion

As long as the 19300 short-term pivotal support holds, the Index is now likely to see another round of potential upside movement to target  20230/380

On the other hand, failure to hold above the 19300 pivotal support is likely to negate the bullish tone for a further slide to retest the pull-back support of the former trendline resistance from 08 January 2016 high at 19000 (also our medium-term pivotal support).

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