What happened last week
The Hong Kong 40 Index (proxy for the Hang Seng Index) has challenged but managed to recover from the weekly pivotal support at 23400 as expected. Please click on this link for more details on our previous write-up.
Key elements
- The long-term Stochastic oscillator still has some “upside room” before reaching its extreme overbought level (see weekly chart).
- The intermediate term RSI oscillator remains bullish above its pull-back support and 50% level (see daily chart).
- The 24800/25000 zone is a 1.00 Fibonacci projection from the 16 December 2014 low to 29 December 2014 high which also confluences with the upper boundary of a short-term ascending channel (in purple) in place since 16 Dec 2014 (see 4 hour chart).
- The lower boundary of the short-term ascending channel (in purple) now stands at 23600 (see 4 hour chart).
Key levels (1 to 3 weeks)
Key pivot (support): 23600
Resistance: 24350 & 24800/25000
Next support: 23270 & 22550
Conclusion
The bullish trend in place since 16 December 2014 low remains intact. We have tightened the weekly pivotal support to 23600 as the Index has managed to stage a break out above its former intermediate term trendline resistance. As long as 23600 hold, the Index is likely to continue it upside movement towards 24350 before 24800/25000.
On the other hand, failure to hold above 23600 may jeopardise the bullish trend to see a retest on the 23270 level. Only a clear break below 23270 is likely to trigger a deeper slide towards the long-term support at 22550.
Disclaimer
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