hang seng index potential push up within triangle range 1820352016

Daily Outlook, Fri 08 July 2016

(Click to enlarge charts)

What happened earlier/yesterday

Since hitting a high of 21176 on Monday, 04 July 2016, the Hong Kong 50 Index (proxy for the Hang Seng Index futures) has tumbled by 4.10% to print a low of 20279 on Wed, 06 July 2016. The recent short-term sell-off is triggered by renewed Italian banking crisis that will have a negative domino effect across the EU financial system.

Technically speaking, the Hong Kong 50 Index is still evolving in a range/sideways configuration and has not exhibit any major toppish signals or elements.

Please click here to recap our latest weekly technical outlook/strategy published on Monday, 04 July 2016.

Key elements

• In today’s early morning session, 07 July, the Index has shaped a decline to cover the minor gap support formed yesterday at 20470.
• The short-term key support to watch now will be at 20250 which is defined by the minor swing high areas of 24/27 June 2016 and close to the 61.8% Fibonacci retracement of the recent rally from 24 June 2016 low (Brexit) to Monday, 04 July 2016 high of 21176.
• The 4 hour RSI oscillator is coming close to a ascending trendline support coupled with the 1 hour Stochastic oscillator right at the oversold region. These observations suggest limited downside potential for the on-going decline as downside momentum of price action has started to wane.
• As mentioned earlier, the Index is still evolving within a “Triangle range” configuration in place since 21 April 2016  with the upper boundary (resistance) of the range now at 21170/21280.

Key levels (1 to 3 days)

Intermediate support: 20470

Pivot (key support): 20250

Resistances: 20750 & 21170/280

Next support: 19790 (lower boundary of “Triangle range”)

Conclusion

Potential push up with range configuration. As long as the 20250 daily short-term pivotal support holds, the Index is likely to see a potential push up to retest yesterday’s (06 July) minor swing high area at 20750 before a further upside movement towards 21170/280 (upper boundary of “Triangle range”).

However, a break below the 20250 short-term pivotal support may negate the preferred bullish tone to see a slide towards the lower boundary of the “Triangle range” at 19790.

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