hang seng daily outlook wed 06 jan 2016 further potential decline below 21040 1791822016
<p>(Click to enlarge charts) What happened earlier The Hong Kong 40 Index (proxy for the Hang Seng Index) has broken below the short-term pivotal support […]</p>
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What happened earlier
The Hong Kong 40 Index (proxy for the Hang Seng Index) has broken below the short-term pivotal support at 21020 and invalidated the preferred corrective rebound scenario. Please click on this link for a recap on our previous daily outlook/strategy.
Key elements
- The Index has continued to drift lower towards the lower end of the ‘Expanding Wedge” configuration in place since 23 October 2015 high with its lower boundary (support) at 20700/20500 (see 4 hour chart).
- On the shorter-term, the Index has evolved in a bearish descending channel with upper (resistance) and lower (support) boundaries at 21350 and 20700 respective (see 1 hour chart).
- The 20700 support also confluences with multiple Fibonacci projections from various degrees.
- The hourly (short-term) RSI oscillator remains bearish below its trendline resistance and the 50& neutrality level.
Key levels (1 to 3 days)
Pivot (key resistance): 21040
Support: 20700
Next resistance: 21350
Conclusion
As long as the daily (short-term) pivotal resistance at 21040 is not surpassed, the Index may see a further push down to target the 20700 support (first medium-term downside target, details here as per highlighted in our latest weekly outlook/strategy).
On the other hand, a clearance above the 21040 pivotal resistance is likely to negate the bearish tone for a squeeze up towards the descending channel resistance at 21350.
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