hang seng index potential push up above 2334023170 support 1832172016

Daily Outlook, Wed 28 Sep 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has managed to stage a rally in yesterday’s Asian session (27 September) to print a high of 23650 in line with the rest of the major stock indices as the first U.S. presidential debate got underway. The most important aspect is the rally seen in the Index came right above the 23000 medium-term pivotal support (printed a low of 23170). Please click on this link to recap our latest weekly technical outlook/strategy published on Monday, 26 September 2016.

The rally seen in the Asian session fizzled out when Europe opened for cash trading as legal woes of Deutsche Bank returned to spook the markets. However, the selling see in the Hong Kong 40 Index was much muted as it only dropped by 0.8% to print a low of 23437 towards the end of the European session versus a drop of 1.5% to 2% seen in European benchmark stock indices such as the DAX.

 Key elements

• The ongoing decline from yesterday’s Asian session high of 23650 is now resting right at the 61.8% Fibonacci retracement of yesterday’ rally from 23170 low to 23650 high at the 23340 level which also confluences with the former minor congestion zone’s upper limit from 14 September 2016.
• The hourly (short-term) Stochastic oscillator is now right at an extreme oversold level which suggests that the downside momentum of the ongoing decline is being “overstretched” and the Index is likely to shape a potential rebound at least in the short-term at this juncture.
• The near-term resistance stands at 24070 which is defined by the minor swing high of 22 September 2016.
• Short-term pivotal support rests at 23170.

Key levels (1 to 3 days)

Intermediate support: 23340

Pivot (key support): 23170

Resistance: 24070

Next support: 23000 (medium-term pivot)

Conclusion

Maintain bullish bias above 23340/23170 for a potential short-term push up to retest 24070.

However, failure to hold above the 23170 short-term pivotal support is likely to put the bulls on hold to see a further slide to test the 23000 medium-term pivotal support.

Charts are from City Index Advantage TraderPro

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