hang seng index weekly outlook for 06 apr to 10 apr bullish breakout above key 2500025100 further up

(Click to enlarge charts)

What happened last week

The Hong Kong 40 Index (proxy for the Hang Seng Index) has managed to stage a clear bullish breakout (weekly close) above the long-term significant resistance at 25000/25150 on its fourth attempt as expected.

Please click on this link for more details on our previous weekly outlook.

Key elements

• The Index has broken above the 25000/25150 former long-term significant resistance in place since the November 2010 swing high (see weekly chart).
• The upper and lower boundaries of the ascending channel (in orange) in place since 25 June 2013 stands at 26370/26750 and 23450/23300 respectively (see daily chart).
• The intermediate term RSI oscillator has staged a bullish breakout above its former resistances now turns pull-back supports (in dotted green) (see daily chart).
• The upper boundary of a shorter-term ascending channel (in purple) in place since 16 December 2014 also stands at 26370 which confluences with the 1.00 Fibonacci projection from 16 December 2014 low to 11 March 2015 low (see 4 hour chart).
• The lower boundary of a shorter –term ascending channel (in brown) in place since 13 March 2015 stands at 25000 which confluences with the former long-term resistance now turns pull-back support and the 23.6% Fibonacci retracement from 11 March 2015 low to 03 April 2015 high (see 4 hour chart).
• The short-term Stochastic oscillator has reached its “extreme” overbought level which highlights the risk of an imminent short-term pull-back (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate support: 25000

Pivot (key support): 24600

Resistance:  25720 & 26370

Next support: 24200 & 23450/23300

Conclusion

Technical elements remain bullish but do expect a potential pull-back first towards the intermediate support at 25000 with a maximum limit set at the 24600 weekly pivotal support before another potential upside movement materialises to target 25720 before 26370.

However, a break below 24600 may negate the medium term bullish trend for a slide towards the next support at 24200 (lower boundary of the ascending channel (in purple in place since 16 December 2014 + 61.8% Fibonacci retracement from 11 March 2015 low to 03 April 2015 high). Only a clear clearance below 24600 is likely to trigger a deeper decline to test the long-term support at 23450/23300.

Disclaimer

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