hang seng index weekly outlook for 16 feb to 20 feb potential push up to test the 2500025100 resista

What happened last week

The Hong Kong 40 Index (proxy for the Hang Seng Index) has challenged the weekly pivotal support but managed to stage a rebound on last Thursday, 12 February 2015.

Please click on this link for more details on our previous weekly outlook. * Note that the Hong Kong stock market is closed for half-day on 18^Th February 2015 and full-day on 19^Th and 20^th February 2015 for the Lunar Chinese New Year holidays.

Key elements

• The Index has tested thrice on the 25000/25150 long-term significant resistance in place since the November 2010 swing high (see weekly chart).
• The long-term RSI oscillator is also coming close to its trendline resistance (see weekly chart).
• The upper and lower limits of the ascending channel (in orange) in place since 25 June 2013 stands at 26400/26750 and 23200 respectively (see daily chart).
• The intermediate term RSI oscillator remains bullish above its supports and 50% level (see daily chart).
• The 26400/26750 resistance400 level confluences with a Fibonacci cluster (see daily chart)
• The short-term Stochastic oscillator is now at an “extreme” overbought level which suggests the risk of a pull-back (see daily chart).
• The 23540 support also corresponds with the 23.6% Fibonacci retracement from 16 December 2014 low to 05 February 2015 high (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate support: 23540

Pivot (key support): 24200

Resistance: 25000/25150 & 26400

Next support: 23450/23200

Conclusion

Based on the above mentioned elements, the Hong Kong 40 Index may see a short-term pull-back towards 23540 with the maximum limit set at the 24200 weekly pivotal support before a push up to test the key 25000/25150 resistance.

Only a clear break (daily close) above 25000/25150 is likely to trigger a multi-month upside movement towards the next resistance at 26400.

On the other hand, failure to hold above 23200 may negate the bullish tone to see a slide towards the 23450/23200 support (lower limit of the ascending channel).

Disclaimer

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