Hong Kong: Hang Seng Index (.HSI) plunges on strikes

Hong Kong: Hang Seng Index (.HSI) plunges on strikes

Hong Kong: Hang Seng Index (.HSI) plunges on strikes

The Hang Seng dropped 2.9 per cent to 26,151.32 for a ninth straight day of declines. The last time when such a run happened was back in March 1997, a few months before the handover of the former British colony and before the Asian financial crisis.

Operators of transport services from the MTR to Cathay Pacific led the decline as demonstrators targeted the rail lines and air crew joined the protest by striking. 

Technical Indicators

Overall, the bias in prices is: Downwards.

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

By the way, prices are vulnerable to a correction towards 27,950.65.

The projected upper bound is: 26,957.68.

The projected lower bound is: 25,300.33.

The projected closing price is: 26,129.00.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black 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 6 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is 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 3.9861. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 10 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 21.80. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 40 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 -231.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 18 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 -767.260 at 26,151.320. Volume was 22% above average (neutral) and Bollinger Bands were 28% wider than normal.

Open     High      Low     Close     Volume___
26,480.47126,502.60926,086.85926,151.3202,186,335,488
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 27,864.88 27,935.99 27,592.58
Volatility: 20 19 22
Volume: 1,494,209,408 1,596,279,168 1,801,640,192

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 5.2% below its 200-period moving average and is in an downward 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 moderate flows of volume out of .HSI (mildly bearish). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 5 periods. Our momentum oscillator is currently indicating that .HSI is currently in an oversold condition.

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