Hong Kong: HANG SENG INDEX (.HSI) investors cheering a decision by the city to suspend plans to push through a controversial extradition law

Hong Kong: HANG SENG INDEX (.HSI) investors cheering a decision by the city to suspend plans to push through a controversial extradition law

Hong Kong: HANG SENG INDEX (.HSI) investors cheering a decision by the city to suspend plans to push through a controversial extradition law

Hong Kong stocks rallied yesterday, leading many Asian markets higher after last week’s losses, with investors cheering a decision by the city to suspend plans to push through a controversial extradition law.

Investors are also moving cautiously ahead of two huge market-moving events: the Federal Reserve policy meeting this week with its plans for interest rates in focus, and the G20 summit next week where US President Donald Trump and his Chinese counterpart Xi Jinping are due to hold trade talks.

Investors returned to buying in Hong Kong after three days of losses that saw the Hang Seng drop more than 2% after protests against the law — which would have allowed extradition to China — turned violent on Wednesday.

Another, peaceful, demonstration on Sunday saw around 2mn people take to the streets, according to organisers. The plan had also spooked business leaders who feared it would damage the city’s reputation as an international business hub.

Traders “will breathe a loud sigh of relief today, as on Wednesday when tear gas and rubber bullets were filling the air, the markets were getting extremely jittery that this ticking time bomb was about to explode”, said Stephen Innes, managing partner at Vanguard Markets.

The Hang Seng closed up 0.45%, while Shanghai gained 0.2% and Tokyo’s Nikkei ended up 0.03%. Elsewhere, Jakarta, Seoul and Taipei all ended the day in the red.

Traders are now awaiting the conclusion of the Fed’s policy meeting on Wednesday, with hopes it will provide some forward guidance on rates, even if it is not expected to announce a cut just yet.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 28,008.35.

The projected lower bound is: 26,373.01.

The projected closing price is: 27,190.68.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

An inverted hammer occurred. If this occurs during a downtrend (which appears to be the case with HANG SENG INDEX) it implies a reversal. Look for a confirmation of the reversal on the bar.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend the long upper shadow indicates that the bears are gaining control and a top may occur.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 37.5842. This is not an overbought or oversold reading. The last signal was a sell 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 41.56. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 6 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 45. This is not a topping or bottoming area. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 6 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed up 108.811 at 27,227.160. Volume was 22% below average (neutral) and Bollinger Bands were 38% narrower than normal.

Open High Low Close Volume___
27,252.44927,503.10027,227.16027,227.1601,533,264,640

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 27,183.28 28,607.35 27,435.48
Volatility: 19 18 22
Volume: 1,862,739,712 2,025,266,944 1,873,524,352

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

HANG SENG INDEX is currently 0.8% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .HSI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 27 periods.

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