Featured Trade Hang Seng Index bearish reaction below key resistance

Short-term technical outlook on Hang Seng Index/Hong Kong 50 (Wed 20 Mar)

Key technical elements

• The recent push up of 5.7% seen on the Hong Kong 50 Index (proxy for Hang Seng Index futures) from its 08 Mar 2019 minor swing low of 28011 has stalled at its 29510 key medium-term resistance as per highlighted in our latest weekly technical outlook report published earlier on Mon (click here for a recap).  
• The 29510 key medium-term resistance also now coincides closely with a Fibonacci expansion cluster derived from the lower time frame hourly price action from its 08 Mar 2019 low of 28011 (see daily chart).
• The Index has broken below a minor ascending trendline support in place since 08 mar 2019 low now turns pull-back resistance at 29400. Prior to the breakdown, the daily RSI oscillator has flashed a bearish divergence signal since 06 Mar 2019 at its overbought region.
• The shorter-term hourly RSI oscillator has indicated short-term downside momentum remains intact as it remains below the 50 level and still has room to manoeuvre to the downside before it reaches the oversold region.
• The next significant near-term supports rests at 29180 (former minor swing high areas of 04/15 Mar 2019) and 28730 (the minor range support of 13/14 Mar 2019 & close to 50% Fibonacci retracement of the recent push up from 08 Mar 2019 low to 19 Mar 2019 U.S. session high).

Key Levels (1 to 3 days)

Intermediate resistance: 29400

Pivot (key resistance): 29510

Supports: 29180 & 28730

Next resistance: 30000

Conclusion

The 3-month rally from its 03 Jan 2019 low of 24886 has started to lose upside momentum right below the 29510 key medium-term resistance where the odds of a multi-week decline increases at this juncture.

If the 29510 key pivotal resistance is not surpassed, the Index is likely to stage a potential push down to target the next near-term supports at 29180 and 28730 in the coming days.

On the other hand, a clearance with a daily close above 29510 invalidates the bears for a continuation of the rally to target the intermediate resistance at 30000 (psychological & 1.382 Fibonacci expansion of the recent push up from 08 Mar 2019 low to 12 Mar 2019 minor high projected from 14 Mar 2019 minor low).