Hong Kong: HANG SENG INDEX (.HSI) Possible Correction Towards 29,833.54

Hong Kong: HANG SENG INDEX (.HSI) Possible Correction Towards 29,833.54

Hong Kong: HANG SENG INDEX (.HSI) Possible Correction Towards 29,833.54

Asian share markets fell. In China, the Shanghai Stock Exchange Composite fell 1.22% while Hong Kong’s Hang Seng dropped 1.24%. Elsewhere, Japan’s Nikkei 225 declined 1.6%.

DBS Group Research wrote in a note today that “the tariff news was “ill-timed for investors hoping for a trade war respite to capitalise on the expected stream of strong US corporate earnings.”

“Instead, futures are now looking for the major US stock indices to open 0.8-0.9% lower later tonight. Overall, (US President Donald) Trump reminded markets that US-China trade tensions are likely to escalate ahead of the US mid-term elections in November. Our view remains for the USD to be underpinned for the rest of the year,” DBS said.

“Judging from (China’s) economic fundamentals and corporate earnings expectations, which are under pressure amid the trade war with the United States, the stock market is yet to reach a bottom,” said Yan Kaiwen, an analyst with China Fortune Securities.

Beijing’s commitment to its ongoing deleveraging campaign means that tight credit conditions will continue, Yan said.

State media cast news of new tariffs and slumping shares in a different light.

The news could “bring some negative emotion to financial markets in the short term, but over the long run, fundamentals of Chinese financial markets have not changed, and (investors) shouldn’t over-value its impact,” Guan Tao, former director of the international payments department at China’s State Administration of Foreign Exchange (SAFE) was quoted as saying by the state-owned Xinhua news agency.

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 29,833.54.

The projected upper bound is: 29,253.38.

The projected lower bound is: 27,302.16.

The projected closing price is: 28,277.77.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 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 5 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 66.5075. This is not an overbought or oversold reading. The last signal was a buy 7 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 35.74. 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 7 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 -87. This is not a topping or bottoming area. The last signal was a buy 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 1 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -370.561 at 28,311.689. Volume was 6% below average (neutral) and Bollinger Bands were 55% wider than normal.

Open High Low Close Volume___
28,013.72128,365.72128,013.72128,311.6891,929,055,104

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

Moving Averages: 10-period 50-period 200-period
Close: 28,477.61 30,122.70 29,991.20
Volatility: 21 21 21
Volume: 2,291,928,576 2,034,851,968 2,180,271,360

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 5.6% 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 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 15 periods.

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