Hong Kong: HANG SENG INDEX (.HSI) market goes into meltdown mode after Trump warns of new tariffs threat

Hong Kong: HANG SENG INDEX (.HSI) market goes into meltdown mode after Trump warns of new tariffs threat

Hong Kong: HANG SENG INDEX (.HSI) market goes into meltdown mode after Trump warns of new tariffs threat

Donald Trump is certainly predictable when it comes to being unpredictable.

While that might sound like an oxymoron, the United States President has taken a verbal “sledgehammer” to trade talks with China and a wrecking ball to Asian markets with his Sunday tweets.

In a few keystrokes, Trump put an accord between the world’s two leading economies at risk when he threatened to increase tariffs by 25% on Chinese imports worth US$200 billion if Beijing refuses to sign up to a detailed “enforcement mechanism.”

Washington is concerned that President Xi Jinping’s administration will wriggle out of an agreement and fail to carry through with promises to further open up markets and curb excessive state subsidies to China’s corporate juggernauts.

Intellectual property rights and cyberspying are other vital issues which have proved sticking points when it comes to an all-encompassing policing accord.

“The reason enforcement has become central to this negotiation is the long history of China not living up to the spirit of the commitments it has made in the WTO and in bilateral negotiations with the US and other countries,” Edward Alden, a trade specialist at the Council on Foreign Relations, said.

“China can change its laws in ways that please the United States, but then use regulatory tools to thwart implementation,” he added.

Reaction from Beijing has been measured although round 11 of trade talks, which were due to start later this week in Washington between US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer and Vice-Premier Liu He’s team, hang in the balance.

Geng Shuang, a spokesman for the Ministry of Foreign Affairs, confirmed that China’s delegation was “preparing to travel to the US.” But he declined to give a concrete date or say whether Liu would go with the party.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 30,000.40.

The projected lower bound is: 28,458.51.

The projected closing price is: 29,229.45.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more bearish.

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 58.6679. This is not an overbought or oversold reading. The last signal was a buy 4 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 43.05. 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 sell 15 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 -264.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 4 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 sell 10 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -871.730 at 29,209.820. Volume was 64% above average (neutral) and Bollinger Bands were 49% narrower than normal.

Open High Low Close Volume___
29,342.38129,384.01028,956.47129,209.8203,024,809,984

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

Moving Averages: 10-period 50-period 200-period
Close: 29,771.46 29,299.51 27,513.00
Volatility: 20 17 22
Volume: 1,694,920,576 1,979,643,392 1,813,246,592

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 gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
HANG SENG INDEX is currently 6.2% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .HSI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .HSI and have had this outlook for the last 20 periods.

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