hang seng index daily outlook fri 09 oct bullish tone remains intact for a potential short term last

(Click to enlarge chart)

What happened yesterday

The Hong Kong 40 Index (proxy for the Hang Seng Index) has held above the 22260/22130 daily pivotal support (neckline support of the “Double Bottom” bullish breakout) and staged a rebound during the European/U.S. sessions.

In this morning’s opening session, the Index has managed to gap up in line with the strong closing levels seen on the major U.S. stock indices and almost met the lower limit of our expected upside target at 22890. Please click on this link for a recap on our previous daily outlook.

Key elements

The Index continues to evolve within a short-term ascending channel (in orange) in place since 29 September 2015 with its upper limit (resistance) at 23170.
The 23170 resistance also confluences with the 76.4% Fibonacci projection of the 29 September 2015 low to 06 October 2015 low @1pm (the typical 5^th wave target based on the Elliot Wave Principal).
The hourly (short-term) RSI oscillator remains bullish above its support and the 50% neutrality level. In addition, it still has some room left for potential upside before reaching its extreme overbought level.
The lower limit (support) of the ascending channel stands at 22500 which is also the gap support based on this morning’s price action.

Key levels (1 to 3 days)

Pivot (key support): 22500

Resistance: 23170 & 23600

Next support: 22260/22130

Conclusion

Based on the current technical elements, we maintain our bullish bias and tightened the daily (short-term) pivotal support to 22500 for a potential short-term last push up to target the 23170 resistance with a maximum limit set at 23600.

On the contrary, a break below the 22500 pivotal support is likely to negate the bullish tone for a slide to retest the neckline support of the “Double Bottom” bullish breakout at 22260/22130

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