Chart of the day Potential bullish breakout looms for Hang Seng Index

Short-term technical outlook on Hong Kong 50 Index (Thurs, 15 Mar)

Key technical elements

• The Hong Kong 50 Index (proxy for Hang Seng Index futures) has managed to erase all its overnight losses inflicted in yesterday’s 14 Mar U.S. session as it manages to stage a rebound of 1.4% in today, 15 Mar Asian session from its minor ascending channel support from 05 Mar 2018 low (depicted in dark blue on its 1 hour chart).
• The aforementioned recovery has been accompanied by a short-term bullish “Marubozu” candlestick pattern (see 1 hour chart). In addition, the daily RSI oscillator has continued to inch upwards after a retest on its corresponding trendline support at the 50% level. These observations suggest that short to medium-term upside momentum of price action has resurfaced.
• The key short-term support rests at 31060 which is defined by a confluence of elements; the minor ascending channel support, the former minor swing high area of 01 Mar 2018 and the 38.2% Fibonacci retracement of the recent rally from 07 Mar 2018 minor swing low to 13 Mar 2018 high.
• The intermediate resistances stand at 31800 (neckline resistance of an impending bullish “Double Bottom” chart configuration in shape since 09 Feb 2018 U.S. session low follow by 32500 next (upper boundary of the minor ascending channel  & the 1.00 Fibonacci projection of the up move from 09 Feb 2018 low to 27 Feb 2018 high projected from 05 Mar 2018 low).

Key Levels (1 to 3 days)

Intermediate support: 31360

Pivot (key support): 31060

Resistances: 31800 & 32500

Next support: 30100/30070 (key medium-term pivot)

Conclusion

Therefore as long as the 31060 key short-term pivotal support holds and a break above the 31800 neckline resistance of the “Double Bottom” is likely to reinforce the start of a potential impulsive upleg sequence to target the next intermediate resistance at 32500 in the first step.

However, a break below 31060 should put the bulls on hold for a deeper slide to test the 30100/30070 key medium-term pivotal support.

Charts are from City Index Advantage TraderPro