Technical Analysis Comments for HSI

When i look at the Hang Seng Index stock chart, i can see that it has been struggling around the 100EMA (the dark blue line - click twice to enlarge the chart), while most other major indices have already broken the 200EMA. This has already pre-warned me that HSI is likely to see more downside pressure as other major markets have already been moving downwards persistantly.

Let’s take a closer look at the HSI chart :

1. it has FINALLY broken the 100EMA of 26800 yesterday….this means that 26800 may turn from support to become resistance in the near term. In fact we can tolerate short term breakdown, but HSI must climb back above 26800 as soon as possible, preferably within one week to halt this downward momentum. this will be the first thing to watch out for. in any case the fact that it broke 26800 yesterday may have already attracted more sharks ( i mean shortists) to come in since the can see that the risk/reward is quite good if u assume the next support is what i have put on the chart (3 reference points below) :

a. 25648 - this is the 50% fibonacci retracement since the rebound of 19386 back during the august 2007 selldown

b. 24874 - this is the 200EMA - i believe this will be the strongest support for HSI, in fact that was when the market bottomed back in august 2007 during the selldown…when market hit 200EMA.

c. 24196 - this is the 61.8% fibonacci retracement level, another strong rebound points but since it is below 200EMA, we dont have to worry too much bout this level for the time being.

Other technical indicators signal :

1. multiple moving averages (MMA)

short term MMA (blue lines) are ALL below long term MMA, signaling that broad trend has been down since 7th january 2008, when ALL short term MMA move below long term MMA - based on historical data, when this happens, it will take at least two strong rebounds to halt the downward momentum

2. Directional movement index (DMI)

this has been negative since 10th december 2007 - and it remains negative until today!!

3. MACD

been struggling at positive and negative zone, just turned negative again two days ago

4. parabolic SAR

been positive for 5 days but the distance between HSI and the indicator is narrowing. this means that the positive signs are weakening. i expect even this indicator to turn negative either today or the next few days

summary :

HSI overall trend is still weak and may continue to remain weak

it may stage technical rebound or worst still intra day rebound but it has already sent the signals to shortists to short it with all these negative indicators…..

i would watch and see if HSI can goes back above 26800 and needs to stay up there a few days to regain the lost ground.

if not, the other lower reference points i provided could be the next potential support points.

article by :

rooney yong (email : contact@mojostock.com)

stock market blog

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By Rooney

Personal View on Hang Seng Index

Trendlines Analysis and Fibonacci retracement

Hang seng index started the great run from end August to peak around 32000 points in mid October. Subsequent to that, HSI corrected and broken the two lower trend lines and based on what we can see it is moving sideways at the moment. Near term support would be the recent low in mid November of 25893 and after that next support level would be around 24283. These two support levels also near to Fibonacci retracement support levels of 50% and 61.8% at 25701 and 24194.

Moving averages

Based on recent pullback, the 100 exponential moving averages EMA (red line) of HSI has provided good support level. If this is broken, 200EMA should provide very strong support as we have seen that during the August correction.

Potential head and shoulder?

For new uptrend to resume, HSI needs to move back up above 28871 and stabilize above this level before taking out 29962 and the recent high of 31958. This may not be an easy feat in the near term. It will take sometime to rebuild the stronger upward momentum.

Mixed signals indicate range bound with upward bias

Parabolic SAR - negative but getting close to turning positive

Moving averages - 13EMA below 26EMA - negative

MACD - forming higher lows and getting close to turning positive - potential signal that selling pressure is easing

What to watch out for :

1. HSI do not fall below 100EMA in the near term after that next strong support is at 200EMA. Since I can see that HSI is still very far away from 200EMA, this means that the uptrend should be intact at the moment.
2. Support levels at 25893 and 24283 should not be broken.

by Rooney Yong